I heard something I really liked when listening to my podcast of Jim Quinn‘s radio show last night as I was walking home. This morning, as I was listening to the next day’s podcast, I heard Quinn repeat his comment from the day before. Quinn read something written by Walter Williams back in 1997 that is well worth rebroadcasting here:
Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.
Apparently this recently appeared on Rush Limbaugh’s show, too. And Rush does a great job of showing the difference between capitalism and socialism. Quinn, after quoting Williams above, further explained on his show the difference of capitalism and socialism this way:
The problem is that pleasing your fellow man requires creativity and hard work. Looting and enslaving can be done by any thug with political connections. So what’s the purpose of Socialism then? Well, Socialism allows these same elites and losers to return us to the days of looting and enslaving, but while presenting it as a moral imperative sanctioned by the government. So I guess we can say that Socialism is a system of economics that allows men to loot and enslave other men while claiming the moral high-ground.
But not everyone likes and agrees with this quote by Williams. Case in point, Williams has an entry in the Daily Kos wiki that engages is some typical libtard bashing. It quotes Williams and then finishes off with “What Williams cannot say is that the African slave trade operated as a global capitalist market for centuries.”
Attention Daily Kos mind-numbed robots: the African slave trade was not capitalism. Capitalism is the free exchange of goods and services from one to another. The African slave trade was part of the “looting, plundering and enslaving their fellow man” that was and is so common in mankind’s existence. And it is what Socialism will bring us back to if we allow it.
Williams finishes up his article with this very true statement:
Despite the miracles of capitalism, it doesn’t do well in popularity polls. One of the reasons is that capitalism is always evaluated against the non-existent utopias of socialism or communism. Any earthly system pales in comparison to utopias. But for the ordinary person, capitalism, with all of its warts, is superior to any system yet devised to deal with our everyday needs and desires.
When it comes to economics, I’ll take reality over fantasy every day.
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.
The AP news story starts off with the title of “Initial jobless claims increase unexpectedly.” My initial reaction was disbelief. How could the current unemployment be anything but expected?
The number of newly laid-off workers seeking unemployment benefits rose last week, a sign that jobs remain scarce even as the economy recovers.
The Labor Department said Thursday that first-time claims increased by 18,000 in the week ending April 3, to a seasonally adjusted 460,000. That’s worse than economists’ estimates of a drop to 435,000, according to a survey by Thomson Reuters.
“…a sign that jobs remain scarce even as the economy recovers.” What? How can the economy be said to be recovering when jobs continue to hemorrhage away? I also have to laugh at the way the economists are constantly surprised by the unemployment numbers. It’s not all that surprising to me.
Quite simply, the principal purpose of a business is to make money. A business that doesn’t make money soon stops being a business, and all its employees are then out of a job. The more uncertain the future, the more uncertain businesses become about hiring and expanding. And hiring people and expanding business is exactly what will get us out of our current recession. Why would a business hire people and purchase equipment if the likelihood of making a profit is dubious at best? And what is producing that uncertainty? Government, of course.
The massive health care overhaul has passed. What does that mean for additional taxes and fees to businesses? At this point, it’s too soon to tell. After all, the Senate version was passed, but the House is still fighting for its changes to be reconciled into the law. That is producing uncertainty.
People in the White House are talking about tax increases. What will those tax increases be? Will they be focused more on people or on businesses? And if businesses are targeted, will the increased taxes apply to all businesses or just businesses over a certain number of employees? If additional tax burdens apply to a business once it has 51 or more employees, what would a struggling business with 51 or 52 employees likely to do? If you say “fire enough people to drop below the new tax level,” you’re right, and obviously not a government economist. So the prospect of increasing taxes is producing uncertainty.
In the same Reuters report talking about increasing taxes, Paul Volker also floated the idea of a European-style value-added tax. If you think our current tax system is complex, the VAT adds yet another layer of complexity on top of it. And his comment doesn’t show any assurance that our current income tax would be replaced by a VAT, so I’m left to believe that we would have a VAT on top of our current income tax. Adding a VAT to business would produce uncertainty.
Even though much of the science behind human-caused global warming has been shown now to be fraudulent, eco-freaks and people in government are still pushing for a carbon tax. Since everything humans do, including simply breathing, produces CO2, a carbon tax would affect every business, and not in a nice way. Discussion of a carbon tax like Cap and Trade produces uncertainty.
The tax breaks signed into law by President Bush are scheduled to expire in 2010. Will Congress renew the tax breaks, or will it let them expire? The expiring tax breaks would mean a hike in the taxes paid by businesses, and increasing taxes on businesses just puts an additional burden on them in an already tough economy. Not knowing whether the current tax breaks will remain or vanish away produces uncertainty.
Every time government steps into a business and tells it what it may or may not do, it is creating uncertainty. Will this meddling change with the next administration? Will it change with the next big scandal or witch-hunt? Toyota is being pummeled by the government for a run-away acceleration problem which is most certainly mostly hype and partially driver error. But government, who controls Toyota’s competitors, is creating a hostile work environment and fining Toyota over this latest bugaboo. Not knowing if government will allow a business to actually do its job produces uncertainty.
Government isn’t able to create wealth; it can only take it from one person to give to another. And while it is transferring the wealth, some of it sticks in the bureaucracy, so this wealth transference isn’t efficient. Likewise, government cannot create jobs that will stimulate the economy. The most it may do is create government jobs that require taking more of the nation’s wealth to feed the bureaucrats. And that way does not lie prosperity, just more government bureaucracy.
To promote the common welfare, stimulate the economy, and foster the creation of real jobs, government needs to make it easier for businesses to do their business. Our government could easily do that by lowering taxes and reducing uncertainty. But as long as this administration, or any other one, continues to make the future scary and uncertain for businesses, we will be slow to exit this recession, and businesses will be reluctant to hire new people or even keep all of their employees on.
Next time you read that joblessness or recession numbers are unexpected, you may rest assured that you are dealing with someone who doesn’t understand business, even if they have a Ph.D. in economics. Why else would they be so surprised?
I have a simple proposal to solving our recession woes in three easy steps:
Drop the current corporate tax rate from the high rate of 35% to 10%.
Cut in half the capital gains tax rate for everyone.
Cut in half the income tax rate for everyone.
I choose these three steps based on the principle that you get more of what you reward, and less of what you punish. In each three cases, taxes punish business, investing, and working. By dropping the tax rates on all three, the punishment will be less, so the activity by the people will be more. If these three steps were taken today, the economy would go into overdrive almost instantly.
“But a lower tax rate means the government will get less money!” Really? Good! If we as a family or business have money problems, we respond by cutting back expenses. Government should do the same. Instead, government has responded by ramping up the spending. If you are up to your eye-balls in debt, does it make sense to max out even more credit cards for additional things you don’t need? In hard times, the government should be spending less, not more.
A trillion dollars spent here, a trillion dollars spent there. When will the government stop spending huge amounts of our money?
Democrats in Congress engaged in an unwitting April Fools prank this April 1st. Some members of Congress summoned the leaders of the five largest oil companies in the U.S. for a nice modern-day inquisition:
Top executives of the five biggest U.S. oil companies were pressed Tuesday to explain the soaring fuel prices amid huge industry profits and why they weren’t investing more to develop renewable energy source such as wind and solar.
The executives, peppered with questions from skeptical lawmakers, said they understood that high energy costs are hurting consumers, but deflected blame, arguing that their profits – $123 billion last year – were in line with other industries.
“On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,” Rep. Edward Markey, D-Mass., said as his committee began hearing from the oil company executives.
With motorists paying a national average of $3.29 a gallon at the pump and global oil prices remaining above $100 a barrel, the executives were hard pressed by lawmakers to defend their profits.
The first thing I noticed in the article was that every Representative quoted in the article was a Democrat. But that’s not all that surprising, since Democrats in Congress have little to no clue about how the economy works. Let’s tackle the ideas in this article one by one:
“[O]il companies were pressed Tuesday to explain the soaring fuel prices amid huge industry profits”–And why should the oil companies have to explain fuel prices and their industry’s profits to Congress? Oh, right. Members of Congress are being meddlesome busybodies for a grandstanding photo op. “Americans can tell we care about them because we were so mean to the oil businesses” may be applauded by liberals, who believe it is the government’s job to manage a company’s prices and profits. But government control of business is the definition of statism, as illustrated by the statist philosophies of fascism and communism.
“[W]hy they weren’t investing more to develop renewable energy source such as wind and solar”–It is the responsibility of the business itself to determine how it will best invest for its future. Unless you are a fan of big government or a liberal (but I repeat myself) who believes that government should dictate how a business spends its own money, you already understand that. I would have loved to see one of the oil executives ask the Congressmen about why they weren’t spending more of their own salaries on charities and other projects, but that would be just as wrong. After all, your money, whether you are a sanctimonious Democrat or a Big Oil chief, is your money. I have no moral justification allowing me to tell you how to spend your money, and you have no moral justification to tell me how to spend mine.
“[T]heir profits – $123 billion last year – were in line with other industries.”–Oil companies make about 5% profit in bad years, and about 10% profit in the good ones. This puts them in the middle of business profits. Just to compare, the defense industry earned a 6.8% profit in 2007, the oil industry earned 8.4%, and the pharmaceutical industry earned 20.9% profit.
But this talk of rising gas prices and oil company profits ignores the fact that the oil companies don’t set the price of gas. They don’t even set the price of oil. Even OPEC cannot set the price of oil, although they do their best to affect the price. The price of oil is set by the commodities market, but not even arrogant Democrat Congressmen are dumb enough to try to call commodities traders on the carpet.
Here’s the kicker: if the oil companies need to be called on the carpet for their huge profits, then what does about government’s obscene profits from gas taxes? Red Planet has a great cartoon showing the comparison between Exxon’s profit per gallon and the government’s tax on that same gallon. Who is making obscene profits now?
If Exxon and the other oil companies are making obscene profits at 10 cents on the gallon, doesn’t that make the government’s profit from that same gallon of gas four times as obscene? Not if you are a liberal Democrat who doesn’t comprehend the free market. To badly paraphrase Benjamin Franklin from 1776, a liberal Democrat has no problem with profit in the first person, such as “my profit.” It’s only in the third person — “their profit” — that they object.
Reread the article, and you will see this attitude evident in the attitudes of Democrat Representatives as they grill the oil executives. Heaven save us from these clueless, grandstanding liberals!
My in-laws make birthday and Christmas wish lists of the things they would like to get. While nothing says that we have to buy the things on the list, the lists do a good job in cataloging the current likes of that person. And if someone specifies a particular brand of jeans on his list, he can’t complain when you get him those jeans. After all, he said he wanted them.
Since Miss V’s birthday was coming up, we showed her how to create and maintain a gift wish list on Amazon. After a week, this list topped 50 items, 11 of which are rated highest priority. Buying just the highest priority items would easily cost more than $500 after adding in shipping and handling. What she has here is a very large number of wants and a very limited set of means to get them. To be fair, my wife and I have Amazon wish lists with 38 and 45 items respectively, but we’ve had our lists for 2+ years now. And while I have some $100+ big-ticket items on there, I bought the highest priced item myself. It’s good to have a job.
I bring up Miss V’s wish list to show a basic truth of life: our wants are often far greater than our means to acquire them. Most Saturdays, and some week days, she asks us, “What are we going to do for fun today?” If she could, she’d go out shopping for fun every day. Unlimited wants, I tell you. But we are trying to teach her that we have to live within our means, and that means working with budgets. Since her birthday is coming, she started planning a party, and we started putting limits on it. No, she can’t invite everyone from school and church to her party. No, we aren’t getting sushi for everyone. No, we’re not taking everyone out to a restaurant. No, we’re not spending $20+ on gift bags for each kid. We’re so mean.
Instead, we told her how much we were willing to put up for the party, and we limited the number of invitations to go out at eight. I don’t feel bad about not inviting someone when described as “that kid in my class with the brown hair, but I don’t know her name.” The idea about serving sushi was shot down twice, once because it would blow the entire budget to get everything she wanted, and also because not every kid her age likes sushi. Miss V has relatively adult tastes in food having grown up surrounded by adults. I suggested pizza since I don’t know of a kid that doesn’t like pizza. Pizza alone was half the budget. While the frozen pizza she suggested would certainly be cheaper, it would also taste like cheesy cardboard. Having nasty tasting food is not a good way to run a party, as is turning away kids hungry because you skimped on the food, which was her other suggestion.
So she was down to a fraction of her party budget to buy gifts and prizes for the other girls. This meant she needed to visit the dollar store to get what she wanted. Bliss for her, hair-ripping boredom for me, and I don’t have much hair left to rip out. What to do, oh, what to do? Ah-ha! I’ll send the wife! This will give me more time to play my games uh, clean the kitchen for her. Good thing she never reads this.
Since she is still a kid, Miss V expects us to pay for anything she wants. Each trip to the store results in many repetitions of “No, you can’t have that.” Each time TPK asks out loud, “What should we have for dinner tonight?” results in a request from Miss V to go out. Steak is the current favorite for her, but I think it’s the yummy garlic mashed potatoes that she likes better. But unhappily for Miss V, going out is a treat and not the norm, regardless of how much she asks. She hasn’t really realized that going shopping or eating out involves spending money because for the most part, it’s not her money.
This is a common misconception. Whenever I hear someone say “Health care is free in [country],” I always respond that it is not free. People think socialized health care is free in the same way that Miss V thinks dining out is free since the check doesn’t get paid directly out of her pocket.
There are basically two rules to rights: you may not exercise your rights to restrict the rights of others, and you may not force someone else to pay for your rights. The old saying of “your right to swing your fist stops at the end of my nose” gives an idea of what is meant by not restricting the rights of others. You may not do murder since it deprives a person of life, nor may you kidnap anyone since it deprives that person of liberty. As for the second rule about rights, you have no right to the time and money of other people. The government reserves this right in the form of taxes, but individuals may not walk up to someone and demand five dollars. That is theft. But you may be surprised at how many people expect and demand your money.
You will hear more people ask for socialized health care. Recently, I’ve been seeing some TV commercials from DividedWeFail.org (really AARP) about health care and social security. Here’s the commercial on YouTube.
“It’s time for health care and financial security for all,” says the commercial. “All Americans should have access to affordable health care, including prescription drugs, and these costs should not burden future generations,” says the AARP website. “It sounds great, but how will you pay for it?” says I. No matter how much you wave your hands, you can’t make health care and retirement become free for everyone, no matter how much you want it. Forcing other people to pay for your wants is immoral, regardless of how much you want it to happen.
All it proves is that we, like Miss V, have unlimited wants but only limited means to get them.
We have basic cable at home — a first — and I admit that I love watching shows on the Discovery Channel and AMC. Mythbusters and Dirty Jobs are by far my favorites. [By contrast, I'm getting sick of the TV constantly yammering away in the background. --TPK]
One of the channels is a public access forum, and all sorts of random stuff appears there. Sturgeon’s Law is in full force. One morning I was treated to a choice nugget of nonsense in the form of “Liberty News TV.” While waiting for my carpool to arrive, I watched a cartoon explaining why people are unhappy, and purporting to show how government can make them happier.
If you want to experience the… uh, thrill, of Liberty News TV “education,” you can view the same cartoon online here (forward to about 17:30). The three cartoon characters — Bingo, Trudy, and Nigel — chat and stroke the host, Daniel Noel, until about 19:10 when the following gem of economic silliness is given:
Daniel: Why do so many Americans feel unhappy? Let’s start with a big one: the gap between rich and poor. It’s a gap that grows a little every day, thanks to tax cuts for the rich, corporate welfare, and war.
Bingo: I’m poor, and he’s rich. And that stinks. I’m unhappy!
Daniel: A progressive tax system asks more from the rich and increases overall happiness because it spreads the wealth around.
Bingo: Look, Trudy! Nigel’s learning to share.
Trudy: Brilliant! Taxing the rich will help the Yanks pay for health care and improve education. Maybe some of them will learn to pronounce “nuclear.”
Bingo/Trudy: I feel happier already.
Nigel: I’m snuckered. I can’t afford to buy as much stock in Halliburton this year.
Trudy: Sorry, Nigel. Remember the cardinal rule: create the most happiness for the most people.
Nigel: That takes it! My bloody watch has stopped.
Bingo: Don’t worry. I called him a “Wambulance.”
Oh, where to begin? First, the good folk at Liberal Noise Liberty News TV postulate that rich people get richer and poor people get poorer because of tax cuts to the rich, corporate welfare, and war. Nowhere in their calculations does work, differing natural abilities, or education appear. A highly-trained heart surgeon working 60 hours a week will earn far more money than an Oprah-watching couch potato waiting for his welfare check; this growing gap of wealth has nothing to do with tax cuts, corporate welfare, or war. Bill Whittle does an excellent job of explaining away the “growing gap” myth in his two-part essay titled, “Trinity.” I highly recommend you visit his site if you haven’t already done so.
Anyway, Bingo says he’s unhappy because he’s poor and Nigel is rich. A more accurate term to describe the cause of his unhappiness is envy — or as the Bible calls it, “covetousness.” And as long as someone on Earth is richer than Bingo, and as long as he remains envious of that wealth, he will always be unhappy. There is a wise reason why the 10th Commandment basically tells people to stop envying their neighbor’s plasma TV.
Daniel goes on to explain that more people are happy when the wealthy have their pocketbooks forcibly vacuumed to redistribute the money to the poor Bingos of the world. Never you mind that the majority of wealthy people in the United States made that money themselves, and should have as much right as the poor and middle-class to spend their own profits as they see fit. Ignore the fact that these caring and thoughtful lefties have zero sympathy for Nigel, openly mocking his misfortune when he dares to complain that he’s taking it in the shorts. As long as there are people who are getting vacuumed goodies from the world’s Nigels, they will continue to demand that the government apply the suction by way of punitive taxation. The phrase goes, “He who robs Peter to pay Paul will always have the support of Paul.”
But if spreading the money around makes people happy, why aren’t welfare recipients the happiest people on the planet? Well, that’s because they’re having babies. Yes, you read that right. One of the “truths” espoused on this shallow show is that having children does not make us happy. And that’s probably true if you don’t want children in the first place — or if you see every child as yet another mouth to feed and another useless drain on the world’s fragile resources. But if you see a child as a precious gift from God — a unique individual whose personal contributions to the world might include cures for cancer and AIDS, inspiring and beautiful music and literature, or a life given in service to God and man — then each child is a joy, not a burden.
I’ll finish with the cardinal rule that Trudy gives us: “create the most happiness for the most people.” Another way of stating this rule is, “From each according to his ability, to each according to his need.” That little gem comes from the Left’s good buddy, Karl Marx. By this light, I see that Liberty News TV believes happiness comes from Marxist economic theory. I’ll give Communism a pass, thanks. I prefer an economic system that, well, actually works.
You can watch the rest of the program if you have the stomach for it. I found the brief moments I watched to be filled with similarly wrongheaded ideas that seem to be common fodder for the Left today. While I will occasionally watch and read the Left’s ideas, there’s only so much I can take in one sitting.
Someone at work pointed out a very interesting graph created by Robert J. Shiller, a Yale economist, comprising an index of American housing prices for the past 116 years. Click the graphic below to see the full-size image.
The black line tracks the resell price of existing homes since 1890, adjusted for inflation. Notice that since about 1997, the resell cost of homes has nearly doubled? Will we have a price correction like the ones after the booms in the ’70s and ’80s, or have we hit another plateau like the one after World War II? We are a more populous nation now than we were in the 1950s, but we also have 50 years of new home construction. So why the sudden ramp-up of housing costs?
Personally, I blame pump-and-dump schemes as espoused by people like Carleton Sheets. Sheets and others encourage people to jump into the housing market with no money down, then turn around and sell the property for more than their purchase price. Lather, rinse, and repeat, repeat, repeat. But what actual value is added to a property this way? Or is this just a way for people to make a quick buck by being middlemen? I think it’s all about the money, but I have long disliked these schemes.
Immanuel Kant developed a formula to determine whether or not any given action was moral or immoral. Here’s how Wikipedia defines it:
Find the agent’s maxim. The maxim is an action paired with its motivation. Example: “I will lie for personal benefit.” Lying is the action, the motivation is to get what you desire. Paired together they form the maxim.
Imagine a possible world in which everyone in a similar position to the real-world agent followed that maxim.
Decide whether any contradictions or irrationalities arise in the possible world as a result of following the maxim.
If a contradiction or irrationality arises, acting on that maxim is not allowed in the real world.
If there is no contradiction, then acting on that maxim is permissible, and in some instances required.
To sum it up in simpler language, you must ask yourself the question, “How would the world be if everyone did what I’m thinking about doing?” If the world would be worse if everyone acted in a particular way, then that action is not moral; conversely, if the world would be better, then the action is moral and advisable. In the Wiki example, if everyone lied for personal benefit, the world would be worse since we couldn’t trust anyone, and our society runs on trust. So would the world be better if everyone engaged in pump-and-dump plans as espoused by Carleton Sheets? I say it would be worse since it would jack up housing prices to even greater heights, and it is hard enough already for people to break into the housing market for the first time. As long-time renters, my wife and I certainly don’t want home ownership to become any more difficult to attain.
Then again, I have to ask myself whether it’s even worthwhile to aspire to home ownership when some bureaucrat could take my real estate away on the slimmest pretext, thanks to the Supreme Court’s buttheaded ruling on Kelo vs. New London. If everyone were to use the Kelo decision to take people’s homes, the world definitely would be a worse place. Time for the Supreme Court to reread their Kant. And speaking of philosophers in general and Kant in particular, the following Monty Python song always pops into my mind. Warning: potty-mouthed Eric Idle about 60 seconds in.
All together now: “Iiiiiiiiiiiiiiiiiiiiimmanuel Kant was a real pissant…”
In the past, I have written that if the only tool you have is a hammer, it’s not long before every job starts looking like a nail. It is the job of the media to report the news and state their opinions, but there should a clear distinction between opinions on the editorial page and facts on the front page. All too often these days, opinion is reported as fact.
And what is the media’s single tool? It is the “Bush sucks!” hammer that they pound, pound, pound every day. Have you heard that the Dow Jones industrial average of stocks has been hitting record territory recently? Stocks briefly hit another record high today before going down a bit, but the major media doesn’t really want to talk about that because it is good news. Good news isn’t useful in the ongoing mission to bash President Bush.
If we were enjoying an economy like this with a Democrat President in office, the news media would report constantly that the economy is the best in decades, and the boom and bust cycle has been solved, and we’ll never have market corrections ever again. That’s what the economic news was like during President Clinton’s administration, at least before the inevitable dot-com bust came upon us. But since this booming economy is happening at a time when credit can be placed squarely on the Bush administration, faint praise is too much.
Tim Worstall over at TSC Daily posted a very interesting article today dealing with prosperity — namely, how our American prosperity stacks up to that of other European countries. Since this article deals with economics, and since I know some of you break out in hives at the mere mention of economics, I have a cute Easter Ferret for your viewing pleasure. Feel free to skip the rest of this post.
Worstall’s article is titled, “America: More Like Sweden Than You Thought,” and it is an interesting read for an economic article. He begins by discussing a, uh, “fun” economic paper which he recently read that extols the virtues of Europe, especially the Scandinavian countries. He writes:
I will admit that I do find it odd the way that only certain parts of the, say, Swedish, “miracle” are held up as ideas for us to copy. Wouldn’t it be interesting if we were urged to adopt some other Swedish policies? Abolish inheritance tax (Sweden doesn’t have one), have a pure voucher scheme to pay for the education system (as Sweden does), do not have a national minimum wage (as Sweden does not) and most certainly do not run the health system as a national monolith (as Sweden again does not). But then those policies don’t accord with the liberal and progressive ideas in the USA so perhaps their being glossed over is understandable, eh?
As part of their propagandizing, they produce the above cited reports each year. And this time it’s being released chapter by chapter in the lead up to Labor Day. I can tell you that policy wonks are breathless with anticipation waiting for each part as it comes out (I myself was most excited to get chapter 8 linked above). For there is the great joy of seeing that what they think they’re telling us isn’t, in fact, quite what they are telling us.
People with an agenda? Say it ain’t so! While there is some very good news pointed out in the article that Worstall analyzes, there is also a very telling graph.
This graph is based off the Purchasing Power Parity, a means of calculating the diverse prices and salaries of all these nations in a way that makes them roughly comparable. What the writers of the article want you to notice first is that seemingly huge gap between the rich and poor in the United States. But my wife didn’t see that when I showed her the graph. Instead she noticed right away that the top 10% of wage earners in Finland and Sweden only make 111% and 113% of the median income, respectively. She noticed this because her Great-Uncle Kurt, who lives in Sweden and worked for an international insurance company for many years, had 90% of his income taxed away to support other able-bodied Swedes who simply chose not to work. And this is something we should emulate? I don’t think so! Worstall wraps up his column by analyzing the left side of the graph.
In the USA the poor get 39% of the US median income and in Finland (and Sweden) the poor get 38% of the US median income. It’s not worth quibbling over 1% so let’s take it as read that the poor in America have exactly the same standard of living as the poor in Finland (and Sweden). Which is really a rather revealing number don’t you think? All those punitive tax rates, all that redistribution, that blessed egalitarianism, the flatter distribution of income, leads to a change in the living standards of the poor of precisely … nothing.
Such may lead us to a conclusion that the EPI probably wouldn’t like:
If we accept (as I do) that we do, indeed, need to have a social safety net, and that we have a duty to provide for those incapable or unlucky enough to be unable to do so for themselves, we need to set some level at which such help is offered. The standard of living of the poor in a redistributionist paradise like Finland (or Sweden) seems a fair enough number to use and the USA provides exactly that. Good, the problem’s solved. We’ve provided — both through the structure of the economy and the various forms of taxation and benefits precisely what we should be — an acceptable baseline income for the poor. No further redistribution is necessary and we can carry on with the current tax rates and policies which seem, as this report shows, to be increasing US incomes faster than those in other countries and boosting productivity faster as well.
As I said above I’m sure this isn’t quite what the EPI actually wanted to tell us. But there it is, from their own report. Which is why I rather enjoy my working life — sad case that I am — because I get to read all those reports that really don’t tell us what the authors think they are telling us.
Go read the whole thing. And the next time someone tells you we should be more like Europe, you can point out to them that we care for our poor and downtrodden masses just as effectively as they do, and we don’t have to tax ourselves into an economic slump to do it. No nation has ever taxed itself into prosperity. If they can’t accept that truth, it’s probably a lost cause. Just have them check out the cute Easter Ferret instead.