The following story caught my eye:

40 billionaires pledge to give away half of wealth

A little over a year after Bill Gates and Warren Buffett began hatching a plan over dinner to persuade America’s wealthiest people to give most of their fortunes to charity, more than three-dozen individuals and families have agreed to take part, campaign organizers announced Wednesday.

In addition to Buffett and Gates — America’s two wealthiest individuals, with a combined net worth of $90 billion, according to Forbes — 38 other billionaires have signed The Giving Pledge. They include New York Mayor Michael Bloomberg, entertainment executive Barry Diller, Oracle co-founder Larry Ellison, energy tycoon T. Boone Pickens, media mogul Ted Turner, David Rockefeller, film director George Lucas and investor Ronald Perelman.

Combined, the 40 billionaires will donate $115 billion to their favorite charities. Their billions will touch and bless the lives of so many people, and it will all be made possible because of their industry. A poor farmer in Bangladesh may make the same pledge, but his meager money will not have the same scope as the wealth of a billionaire. Having large amounts of money grants a person the ability to greatly bless people’s lives. And the billionaires’ pledge is very laudable.

Now let’s imagine the government has decided that at a certain point, the billionaires have made enough money. Congress could easily write a law taxing at 50% the existing wealth of all billionaires. Do you think President Obama would sign such a bill into law? Hell yes, he would! And let’s also imagine that Congress is spending these incoming billions in exactly the same way that the billionaires would have done themselves.

Are the actions of Congress laudable? Absolutely not.

See, in the first case, the billionaires are voluntarily choosing to give up their own money. In the second case, Congress is stealing the billionaires’ money. It doesn’t matter that the money is going to the exact same charities; the act of Congress remains one of theft, not of voluntary giving. True, it’s theft via law and the armed force of government, but it’s still theft. While Congress’ action would be legal, there is nothing either praiseworthy or moral about forcefully taking one person’s money to give to another.

When you get down to it, it’s the billionaires’ money to do with as they see fit, not the government’s. Every time I hear a liberal talking about taxing the rich, I realize that liberal has forgotten that it’s just not his money.

I’ve already briefly mentioned a recent quote of President Obama speaking in Quincy, Illinois, but this quote deserves more attention:

We’re not, we’re not trying to push financial reform because we begrudge success that’s fairly earned. I mean, I do think at a certain point you’ve made enough money. But, you know, part of the American way is, you know, you can just keep on making it if you’re providing a good product or providing good service. We don’t want people to stop, ah, fulfilling the core responsibilities of the financial system to help grow our economy. [emphasis mine - CM]

I read that, and I heard the whiny voice of a distressed child crying out, “That’s not fair!” I’m sure you can supply your own mental image of some child who has uttered those words. President Obama, in this unteleprompted comment, is telling the nation that it’s just not fair that someone is making more than “enough money” when there are people who are not.

But try as I may, I can’t find any clause in the Constitution that identifies as the role of the Executive, or even of the federal government, to make sure that life is fair. It simply isn’t his place to tell Americans that they’ve made enough money.

P.J. O’Rouke wrote the following at the end of his book Eat the Rich talking about fairness. At 20 years old, the whole book is still well worth reading. *plug* *plug*

Fairness is a good thing in marriage and at the day-care center. It’s a nice little domestic virtue. But a liking for fairness is not that noble a sentiment. Fairness doesn’t rank with charity, love, duty, or self-sacrifice. And there’s always a tinge of self-seeking in making sure that things are fair. Don’t you go trying to get one up on me.

As a foundation for a political system, fairness my be no virtue at all. The Old Testament is clear on this point. The Bible might seem an odd place to be doing economic research, especially by someone who goes to church about once a year, and only then because that’s when my wife says the Easter Bunny comes. However, I have been thinking — in socioeconomic terms — about the Tenth Commandment.

The first nine Commandments concern theological principles and social law: Thou shalt not make graven images, steal, kill, etc. Fair enough. But then comes the Tenth Commandment: “Thou shalt not covet thy neighbor’s house, nor his maidservant, nor his ox, nor his ass, nor anything that is thy neighbor’s.”

Here are God’s basic rules about how we should live, a very brief list of sacred obligations and solemn moral precepts, and right at the end of it is, “Don’t envy your buddy’s cow.”

What is that doing in there? Why would God, with just ten things to tell Moses, choose, as one of them, jealousy about the livestock next door? And yet, think about how important to the well-being of a community this Commandment is. If you want a donkey, if you want a pot roast, if you want a cleaning lady, don’t bitch about what the people across the street have. Go get your own.

The Tenth Commandment sends a message to socialists, to egalitarians, to people obsessed with fairness, to American presidential candidates in the year 2000 — to everyone who believes that wealth should be redistributed. And the message is clear and concise: Go to hell.

And it applies to our current socialist and egalitarian president who is obviously obsessed with fairness.

Moral Compass

Ooo! Evil Goldman Sachs! Evil, nasty, money-grubbing Goldman Sachs! They’re just in it for the money. And did I mention evil?

OK, I’m getting really tired about how people are demonizing Goldman Sachs specifically and Wall Street generally. Demonizing Wall Street is a transparent attempt of the Obama administration to discredit them and drum up yet another crisis. And once they have properly ginned up this crisis, then government will ride up on its white horse and “fix” the crisis by taking control over the financial sector of the economy. And every time people like cartoonist Bruce Beattie demonize Goldman Sachs, they play into the power-grabbing government’s hands.

But it’s clear to me that Beattie doesn’t understand the nature of business. Goldman Sachs isn’t in business to do some moral good. It’s in the business of making money because making money is what businesses do. Businesses that don’t make money just don’t last long as businesses.

Do you think Apple makes iThis and iThat because it loves the public, or does it do it because it loves the revenue that comes from each sale? Obviously, it is the latter. And it is precisely the love of profit that drives Apple to improve and innovate their products to the benefit of people. Adam Smith explained it centuries ago, and it is just as true today.

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

Yes, a business has a moral compass, and it points towards money. That’s what a business does, and if it is successful in achieving money, it has done so by pleasing and benefiting people. If a business has done something illegal, then the government certainly should step in to enforce the law. But just making money isn’t illegal, regardless of President Obama saying, ” I do think at a certain point you’ve made enough money.”

So I got one of the new peach-colored $10 bills. I really like the “We the People” bit on the right, but overall, I think this is a rather girly bit of money. I must spend it quickly before my rugged manliness is diminished in any way.

Here’s a zoom in of the left side of the bill’s front. TPK pointed out something about it:

Aah! Run away!

“Ahh! It’s a binary swarm!”

A common biology lesson deals with how energy is passed from one layer of creatures to another, as demonstrated by the graphic on the right. The yellow bar is 1000 pixels tall, representing the energy that comes from the sun. The next bar is only 100 pixels tall, and this represents the energy taken from the sun by plants for their own use. The next bar is 10 pixels tall, representing the energy which herbivores get from the plants they eat. The final bar is 1 pixel tall, representing carnivores and the energy the get from the animals they eat. I could go on a few more levels, but it’s hard to draw a bar only a tenth of a pixel tall. Each level only gains about 10% of the energy from the layer below.

Vegetarians often use this principle to illustrate how much more efficient it would be if we switched from the carnivorous level to a plant-based diet. Doing so would mean that we would have a tenfold increase of energy available to us. But there’s one big problem with this idea — a carrot just doesn’t barbecue as well as a steak. The carrots slip right through the bars and onto the coals.

Ignoring grilling carrots for the nonce, the laws of thermodynamics explain how energy moves from one layer of life to another and why the energy levels keep dropping in each layer. While an in-depth discussion of thermodynamics is way beyond the scope of this article, it’s still worth taking a quick look at the principle.

1st Law of Thermodynamics — energy can be changed from one form to another, but it cannot be created or destroyed.
2nd Law of Thermodynamics — the disorder in an isolated system will never decrease.
3rd Law of Thermodynamics — absolute zero, the absence of any kinetic energy, cannot be reached, only approached closely.

Since that’s a little dry, here’s how C. P. Snow, a British scientist, described these three laws:

1st Law — you cannot win
2nd Law — you cannot break even
3rd Law — you cannot leave the game

The laws of thermodynamics tell us that any time we do work, we are converting energy from one form to another. Dams take potential energy and convert it into kinetic and electrical energy. Cars take chemical energy and convert it into kinetic energy. That’s the 1st law in action. The 2nd law explains that each time energy is converted, at least some energy is lost in the process. No car engine can convert gasoline into kinetic energy (the vroom) with complete efficiency. Some of the energy from the gasoline is turned into noise and waste heat, neither of which is used. The same thing happens in living machines like you and me. As we eat our grilled steak and carrots, we imperfectly convert that chemical energy into new skin, muscles, and 5K runs.

The 2nd Law describes entropy. Entropy is the spreading out of energy in a system, going from more organized and useful energy into disorganized and less-useful energy. There is no way to reverse this trend other than on a small scale, and doing so will still increase the overall disorder and energy change in the total system.

Bored already? Have you remembered why you didn’t like science classes? Now for the kicker — these laws, but most especially the 2nd Law, apply to life, as the diagram above shows. On average, only 10% of the energy from one layer makes it into useful energy for the next layer. This loss of energy also applies to people, nations, and organizations.

So what is the most efficient way to move money (that’s financial energy for you and me) from one person to another? Notice the trend below:

– You give $100 to someone.
– The Federal Government taxes $100 from you and gives money to someone.
– The Federal Government taxes $100 from you, gives money to a state welfare department, which hands money to the local welfare department, who hands money to someone.

Do you see the extra layers appearing? Remember, as money moves from one layer to another, this movement costs money. So as this $100 passes through the layers of bureaucracy, some is skimmed off to pay for salaries, the buildings and maintenance, and petty cash expenditures. Of our original imaginary $100 taxed from you, the end recipient on welfare gets less than $25. That means over $75 of your hard-earned tax money was lost in pushing your taxes from one department to another. In other words, for every one welfare person you help with your taxes, you have funded three bureaucrats. Gives you a nice warm fuzzy feeling, doesn’t it?

This is one reason why I instinctively favor smaller government over larger government. Smaller organizations cost less to staff, not only in numbers of people on the payroll, but because with fewer layers of bureaucracy there is less entropy as money (energy) passes through. We do need government and the services it provides, but these services come at a cost, both seen and unseen. This is why Thomas Jefferson was correct when he said, “That government is best which governs least.” This is true even on a thermodynamic level.

Some people discuss and fantasize over a world-wide government that would make world-wide laws and policies just as the Federal Government currently makes national laws and policies. But I cannot look on this idea with as much eagerness, because the principles of thermodynamics tell me that adding this extra layer of bureaucracy will sap even more of our financial energy. Knowing how inefficient government already is, why would I want to add yet another layer?

I see no benefit of a world-wide government that would outweigh the cost of having it in the first place.

Do you have any art in your home? Most people do. We own two nicely framed prints purchased in the early days of our marriage. While those two are the most expensive pieces of art we have, we do have many other smaller pieces that brighten up the place. Why do I bring this up? We purchased our art with our own money; I did not put a gun to your head and demand that you buy these art pieces for us. But there are people who are doing this. No, you normally will not see a gun pressed against your head, but you should have noticed the hand of government taking money from your wallet. Just try withholding taxes because you disagree with the government taking your money, and it will come down on you like the proverbial ton of bricks. If you continue to resist, you will see a gun pointed at your head. That is the nature of government and taxes.

So the next time you want the government to do something for you, think of some government agent holding a gun against your grandmother’s head and demanding that she fork over the money for your pet project. Some things the government does actually pass what P.J. O’Rourke calls the “Grandma Test.” If the U.S. needs some more tanks to fight a war, then it’s time for Granny to cough up her share of the dough. But I cannot say the same thing for the National Endowment for the Arts. The NEA is spending about $115 million of our tax money to fund artists this year. Yet is it the responsibility of the federal government to fund art and artists? I don’t think so, and neither did the Founding Fathers. Article 1, Section 8 of the Constitution outlines all the responsibilities of the Congress. As many times as I have challenged people to look carefully through this list of duties and tell me which one gives Congress the responsibility to fund the arts, not one person has been able to justify the NEA’s funding of artists based on something in the Constitution.

“We need artists,” I hear people cry. Sure, we need artists–our world would be very drab and depressing without them–but do we need the government to pay people to be artists? If I were a mechanic, could I demand that the government take money from you and others and give it to me? No, that would be silly. But you will hear this same argument for artists. After all, if we don’t pay artists to be artists, then they would be forced to do something else besides art, and wouldn’t that be a tragedy? In some cases, perhaps it would be. But I think our society will survive without spray-painted shoes stuffed with potatoes. If people think highly of that project, they are free to fund it, but this is not something the federal government should be doing. I do not believe that Karen Finley’s “performance art” of smearing herself with chocolate passes the “Grandma Test,” and regardless of its quality, neither does the artwork of other artists funded by the NEA.

If I wanted to be a mechanic, I could not go to you and demand that you put me through a technical school just so I could be trained. That would be my responsibility. Likewise, if I wanted to become a painter, I would need to pony up my own cash or beg, borrow, or steal the money needed for training and supplies. But what if I were unable to support myself and my family by selling my paintings? Do I have a claim on your money simply because I am a struggling artist? No, no more than I would have a claim on your money if I were a struggling mechanic. If I were not good enough or well-known and trusted enough to support my family as a mechanic, this would not grant me liberty to take your own hard-earned cash, nor would I be justified in using the government as my personal collection agency. I should take the responsibility to either work harder at improving the bottom line of my business, or find another line of work that pays the bills. This holds just as true for artists as it does for mechanics.

I have been told that we must fund the arts, since if the federal government withheld funding, nobody else would step forward to do it. For a moment, let’s pretend that every dime of NEA-earmarked money has been returned to the taxpayers who must deal with the financial burden of this federal fleecing. Would this spell the end of the arts as we know them in the United States? Certainly not. The overwhelming majority of art projects are privately funded to begin with. So what is the big deal about a few million dollars being spent by the government? After all, the entire NEA budget would not be enough to buy the toys we provide for the military. But there is one major problem with this argument: national defense is delineated in the Constitution as a responsibility of government. Funding the arts, noble though it may be, is not.

I have heard someone argue that if the German government had funded an aspiring young painter named Adolf Hitler, he would never have gone into politics or plunged the world into war. This sounds like a powerful emotional argument–but if we can use this “what if” thinking for Hitler, let’s try considering the opposite side of the coin. What if a young Karen Finley and her chocolate syrup performance art were not funded by the NEA? Perhaps she might have pursued another profession, become a world-class scientist, and discovered a cure for AIDS. Which path would you prefer Karen Finley to have taken? The point is, I don’t mind what she does; I do mind that she felt fully justified to perform her “art” on the taxpayer’s nickel. If Karen couldn’t find enough people to pay for her chocolate-covered peep show, perhaps she should think about other career paths and stop demanding that the government hold a gun to Grandma’s head to buy chocolate syrup for the next performance.