Ronald Reagan said, “We will never compromise our principles and standards.”

Are the Republicans in Arkansas true Tea Party Ronald Reagan Republicans?

According to Americans for Prosperity in the last 5 years Arkansas’ current Medicaid program has run a deficit of a billion dollars. Why expand it willingly with Obama? The “Do Nothing” expansion plan increases spending by 5.9 billion with 158,000 new recipients when the Gov. Beebe Expansion plan increases spending by 21.99 billion with 247,000 new recipients.

Let me give you several reasons that Max Brantley of the Arkansas Times Blog may be right about the Arkansas Republicans giving in and expanding the failed medicaid program in Arkansas.

1. The Arkansas Republicans are becoming convinced that if you expand a failed program then it will work better.

Milton Friedman puts it this way:

 Suppose a private group undertakes the project. Suppose it starts to lose money. The only way that they can keep it going is by digging into their own pockets. They have to bear the costs. That enterprise will not last long; people will shut it down. They will go on to something else.

Suppose government undertakes the same project and its initial experience is the same: it starts to lose money. What happens? The government officials could shut it down, but they have a very different alternative. With the best of intentions, they can believe that the only reason it has not done well is because it has not been operating on a large enough scale. They do not have to dig into their own pockets to finance an expansion. They can dig into the pockets of the taxpayers.

Indeed, financing an expansion will enable them to keep lucrative jobs. All they need to do is to persuade the taxpayer, or the legislators who control the purse that their project is a good one. And they are generally able to do so because, in turn, the people who vote on the expansion are not voting their own money; they are spending somebody else’s money. And nobody spends somebody else’s money as carefully as he spends his own.

The end result is that when a private enterprise fails, it is closed down; when a government enterprise fails, it is expanded.

Did I fail to mention that the current Medicaid program is running a deficit of a billion dollars in Arkansas, and some lawmakers in Arkansas want to expand this program?

2. The Arkansas Republicans came into office to cut the size of government but now they are joining  all the 49 Democrats in the House in thinking that spending Washington’s money is spending someone else’s money when it really is expanding government and sticking it to the taxpayer ultimately. 

Milton Friedman observed, “Nobody spends somebody else’s money as carefully as he spends his own.”

3. If the Arkansas Republicans line up with the Democrats and vote for expansion today then they have bought into the socialist policies the Democrats are pushing but ultimately this expansion of socialism will come crashing  down and we will not even be able to meet the obligations to the sick and most vulnerable that we already are serving. 

Milton Friedman’s final conclusion in this speech below is this, “There’s a general rule in government and bureaucratic enterprises: the more you put in, the less you get out.”

When John Fund of the Wall Street Journal came to Little Rock on 4-27-11 to speak he quoted Ronald Reagan in a speech to his campaign workers in 1976. Reagan said concerning socialism, “Whenever and wherever liberalism has been tried, it has always failed.”

This expansion of socialism in Arkansas is supported by the Democrats in Arkansas 100%. I never thought I would see the day that Republicans in Arkansas would consider expanding government with “somebody else’s money.” The sad fact is that is the taxpayer’s money!!!!!

Milton Friedman – Growing Government, Expanding Failure

Here is the transcript:

By any reasonable measure, the United States today is a little over fifty percent socialist. That is to say, more than fifty percent of the total resources in the country, of the total input, is directly or indirectly controlled by governmental institutions at all levels-federal, state, and local. Yet we in the United States have the highest standard of living of any country in the world. We are a very rich and prosperous country. It is an extraordinary tribute to the productivity of the market system that, with less than fifty percent of the resources, it can produce the kind of standard of living and the kind of society we have.

You are working from January 1 to close to June 30, or maybe somewhere after June 30, to pay for the direct and indirect cost of government. What fraction of your well-being comes from those government-controlled expenditures? Is it anything like fifty percent? I doubt very much that many of you would say it is.

The question that my puzzle raises is why is it that private enterprises are successful and government enterprises are not? One common answer is that the difference is in the incentive, that somehow the incentive of profit is stronger than the incentive of public service. In one sense, that’s night; but in another, it’s wrong.

The people who run our private enterprises and the people who run our government enterprises have exactly the same incentive. In both cases, they want to promote their private interests. The people who go into our government, who operate our government, are the same kind of people as those who are in the private sector. They are just as smart, in general. They have just as much integrity. They have just as many altruistic and selfless interests. There is no difference in that way. But as Armen Alchian, an economist at UCLA, once put it, “The one thing you can depend on everybody to do is to put his interest above yours.” That is a very insightful comment. The Chinese who are on the mainland are not different people from the Chinese who are in Hong Kong. Yet, the Mainland is a morass of poverty and Hong Kong has been an oasis of relative well being. The people who occupied West Germany and East Germany before they were reunited had the same background, the same culture. They were the same people, but the results were drastically different.

The problem is not in the kind of people who run our governmental institutions versus those who run our private institutions. The trouble, as the Marxists used to say, is in the system. The system is what is at fault.

The difference is that the private interest of people is served in a different way in the private and the governmental spheres. Consider the bottom line they face.

Here’s a project that might be suggested, to begin with, by somebody in the private sector or by somebody in the government sphere, and appears equally promising in either case. However, all good ideas are conjectures; they are experiments. Most are going to fail. What happens? Suppose a private group undertakes the project. Suppose it starts to lose money. The only way that they can keep it going is by digging into their own pockets. They have to bear the costs. That enterprise will not last long; people will shut it down. They will go on to something else.

Suppose government undertakes the same project and its initial experience is the same: it starts to lose money. What happens? The government officials could shut it down, but they have a very different alternative. With the best of intentions, they can believe that the only reason it has not done well is because it has not been operating on a large enough scale. They do not have to dig into their own pockets to finance an expansion. They can dig into the pockets of the taxpayers.

Indeed, financing an expansion will enable them to keep lucrative jobs. All they need to do is to persuade the taxpayer, or the legislators who control the purse that their project is a good one. And they are generally able to do so because, in turn, the people who vote on the expansion are not voting their own money; they are spending somebody else’s money. And nobody spends somebody else’s money as carefully as he spends his own.

The end result is that when a private enterprise fails, it is closed down; when a government enterprise fails, it is expanded. Isn’t that exactly what has been happening with drugs? With schooling? With medical care?

We are all aware of the deterioration in schooling. But are you aware that we are now spending per pupil, on the average, three times as much as we were thirty years ago, after adjustment for inflation? There’s a general rule in government and bureaucratic enterprises: the more you put in, the less you get out.

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