Economic Ignorance in Politics

Why are political progressives so ignorant of economics? A case in point is given us by Massachusetts U.S. Senate candidate Elizabeth Warren. A sample of her ignorance is demonstrated in the recent well publicized remarks concerning wealth and taxes. Miss Warren remarked to supporters

“There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

She is accurate to say that much of what we individually accomplish is the result in living in our civil society. That social contract enables us to produce. Man is by nature a social animal. But the Senatorial candidate postulates that because of these societal benefits somehow the productive in our culture do not contribute enough. She offers no proof that producers are currently paying too little. Where in our social contract does it say that producers should surrender, by threat of government violence, a hunk of their income? Sheldon Richman writing in The Freeman discusses this idea of paying forward:

“…why aren’t honest production and exchange of valuable goods counted as payment forward? Just as our living standard is the fruit of previous generations’ production, so today’s producers help to raise the living standard of the next generations.”

Political progressives (they are not liberals) have hailed Miss Warren’s comments as testament for higher taxes. However, while starting with a valid premise she ends with an invalid conclusion. I suggest progressives read a more thorough examination of the production concept in Leonard Read’s 1958 essay “I, Pencil”. http://www.econlib.org/library/Essays/rdPncl1.html

Mr. Read states wealth production in terms even today’s political progressives might understand. But then, if such understanding were achieved, talking points based on false conclusions would be lost by the left.

Shut Down Penn State Football

The National Collegiate Athletic Association (NCAA) is known for hammering sports programs that bend or break the rules. They should add Penn State as a top offender. It is almost certain that administrators of Penn State’s football program knew of, and covered for, a sexual predator among its ranks. For details I refer you to the text of the Grand Jury Report but only if you have a strong stomach:

http://www.freep.com/assets/freep/pdf/C4181508116.PDF

Detailed herein are the allegations that the school’s defensive coordinator used his position at the University and a charitable organization which he founded as a means to capture young boys for sexual favors dating back to at least 15 years. An assistant coach, according to the investigation, even witnessed the rape of a 10 year old boy by this long time Penn State defensive coordinator. Did he try and protect the boy? Did he alert law enforcement? The answer to both questions is no. Instead he ran from the scene and called his daddy. The next day he told head football coach Joe Paterno what he had seen. The coach then told the University’s Athletic Director. There’s no indication that police were ever informed. The Grand Jury report contains details on the assault of 7 other boys. There is evidence that campus police had done an investigation into sex abuse allegations involving this predator in 1998. Still he remained active in the school sports program and the charity which was formed to help troubled young boys.

The NCAA has on numerous occasions punished schools for violations of various rules. Top offenders include Arizona State (improper recruiting of baseball players and improper benefits for these players), Southern Methodist University (paying players in their football program), Auburn University (improper player benefits) and University of Minnesota (academic cheating). Penn State should now be moved to the top of the list. If only improper recruiting, financial gain of college athletes or academic cheating are causes for punishment then the NCAA should shut down the legendary football program at Penn State for several years for these sex crimes. In other cases it is mostly ethical violations. In this case the damage done is way beyond that and is immeasurable.

I realize no one is guilty under the law until proven so in a court. But the court of public opinion is another matter. You read the Grand Jury report and decide for yourself.

There is one tiny bright spot in this horrific scandal. It is good to see that at least some perverse behavior is still rejected in our culture.

MY CHRISTMAS WISH LIST

Here are a few things I wish for:

·        Freedom to drive any car I want to drive. I don’t want a Prius or some other ‘green machine’. I currently drive a BMW X5 because it’s big, comfortable and powerful.

·        I want the freedom to choose a light bulb.

·        I want the freedom to set my thermostat at any temperature I choose.

·        I want the freedom to drill for oil and gas on any land I own.

·        I want the freedom to send my child to any school I choose.

·        I want the freedom to succeed or fail.

·        I want the freedom to keep the money I earn and not have it taken by a government and given to those who don’t earn.

·        I want the freedom to be charitable toward those I choose not those chosen by the government.

·        I want the freedom to say the pledge of allegiance or a prayer in a public place.

This is America!

Stupid Is As Stupid Does

Dear Forest,

Once again I find your mother’s wisdom applicable to our present day situation. I watched with horror this week the mob rule of London. Thousands had taken to the streets in a destructive rant that lay waste to entire neighborhoods. Commentaries from the thugs tried to place blame on government or “the rich” but I just couldn’t help thinking about their stupidity.

Here they are in a culture that will provide food, clothing and housing whether they labor or not and yet they feel deprived.  It then occurred to me it had nothing to do with their supposed poverty. Notice most of the looting took place at consumer electronic shops not grocery stores. Book stores were untouched.This brings me back to thinking about your mother’s wisdom as expressed in “stupid is as stupid does”. What we are witnessing is a culture of the stupid. Stupid people tend to make poor judgments. There’s a ton of literature on this in the field of Behavioral Economics (Thaler, Richard H. and Hersh M. Shefrin (1981). An Economic Theory of Self-Control, Journal of Political Economy.)   Research shows lack of self control and discipline may be a major factor in crime. Irrational behavior and poor choices cause poverty.  In fact, contrary to the common claim, we find that crime contributes to poverty, not the other way around.

Can it happen here? It can and it has. We have seen these mobs recently on the streets of Philadelphia and Milwaukee, the state capitals of Wisconsin (government union members) and New Jersey (teachers' union) and in the train stations of San Francisco. These aren't protests, they are mob rule by hooligans. They demonstrate the lack of culture, the group think of these individuals. A clear demonstration of individual stupidity. 

Hoping this finds you in good health and spirits.

Your friend,

Gene

Conservative Joins the Call for Shared Sacrifice

“Shared Sacrifice” has become the mantra of the Democratic Party. The talking points pages are filled with urges to Democrats to repeat the phrase over and over. Listen to any on the left for just a moment and I promise you’ll hear it. So let me, a libertarian Republican, agree. It’s time the share in the sacrifice.

There’s a huge difference between what I see as a shared sacrifice and what those on the left support. Democrats don’t really mean sharing. What Democrats have repeatedly done is go after the same tax payers time and time again. In today’s talking points memo it means “millionaires and billionaires, corporations and corporate jet owners. In truth they’re after anyone making over $200,000 a year not just millionaires. These are the same people that already pay, in my opinion, an unfair share of taxes.

I now call upon all citizens to share and sacrifice. I would include the majority of Americans who pay zero income taxes. That’s right; 51% of Americans pay no income tax. Isn’t it time all Americans shared this sacrifice? Isn’t it time for everyone to have some skin in the game?

Note to Parents and Grandparents: Thanks for Nothing

        It is not uncommon in these times of great financial uncertainty to hear talk of passing on a huge debt burden to our children and grand children.  What is not discussed is what our predecessors have done to us. We are the children and grand children. We are now left with the burden handed to us by our parents and grandparents.

        During the recent debt reduction negotiations our President repeatedly called for a balanced approach. Of course he was referring to adding tax increases to any proposal to slow the growth of government (in Washington slowing growth is referred to as a ‘cut’). He may be right. In order to shoulder the burden heaped upon us by previous generations we will all likely have to pay higher taxes.

        Rather than think about what we might be doing to future generations let us consider for a moment what has been done to us. Previous generations of voters have stuck it to us. The chickens are coming home to roost.

Don't Discount Newt

       A Republican pollster says about the current Presidential campaign “we’re in the personality phase of the campaign but eventually it’s going to move from personality to policy”. Enter Newt Gingrich.  Liberals of course snicker and sneer which is what they did in 1994. That is, until Mr. Gingrich, the Republican Congressman from Georgia, lead the party to its first House majority in 40 years and Congressman Gingrich became Speaker of the House.

       It is interesting to hear Democrats today tout the 1990’s as the time when our country had a balanced budget. When President Clinton was replaced by George Bush, according to some Democrats, there was a budget surplus (not really, but I’ll save that examination for another time). If one studies history accurately you will see that these same Democrats did all they could politically to keep this from happening.

       In the spring of 1995 President Clinton revealed his plan to balance the federal budget after relentless Republican pressure.  In 1994 he said he thought a balanced budget could be obtained in 10 years. The speech in the spring of ’95 he had moved his balanced budget goal to 7 years. This was the direct result of pressure from the newly elected Republican house majority and Speaker Gingrich. Liberals were angry. Chief of Staff Leon Panetta, Erskine Bowles, George Stephanopoulos and Laura Tyson said they were considering resigning because of the President’s budget proposals. President Clinton had, according to memoirs, remorse and thought he might have made the wrong decision. And these are some of the Democrats that today brag about the balanced budget of the 1990’s.

       Newt Gingrich was the driving force behind the federal balanced budget of the 1990’s. So we may be talking today about President Obama’s attractive personality or Donald Trump tossing the “f” bomb at a recent appearance but at some point, as pointed out by liberal pundit Walter Shapiro in the New Republic, we will move from personality to policy. Even die hard ideologues know that when that occurs, Newt Gingrich will be a very formidable opponent.

Presidents Bush and Obama Are Wrong About Islam

Within a month of the September 11^th attack on the World Trade Center in New York City President Bush said “Our enemy does not follow the great traditions of Islam. They’ve hijacked a great religion”. President Bush and President Obama are trying to have us believe that Islam is no different than Judaism or Christianity. That it is a religion of peace. Our Presidents are wrong.

Playboy magazine’s German edition features actress Sila Sahin on the cover of its May edition. She is Turkish Muslim. Her nude appearance in the magazine has so angered Muslims she has received numerous death threats. Is there any other religion that has done so? Islam teaches that to disagree with its law and politics is punishable by death.

Authorities on Islam teach that the Koran must be read so that the parts written last override the others. This holds that parts of the Koran written after Muhammad went to Medina are the ruling parts. I refer to Suras 9 and 5. Sura 9, verse 5, reads: “Fight and slay the unbelievers wherever ye find them, and lie in wait for them in every stratagem of war. But if they repent, and establish regular prayers and practice regular charity, then open the way for them….”

Sura 9, verse 29, reads: “Fight those who believe not in Allah nor the Last Day, nor hold that forbidden which hath been forbidden by Allah and His Apostle, nor acknowledge the religion of truth, even if they are of the 40 people of the Book, until they pay the jizya with willing submission, and feel themselves subdued.”

Sura 5, verse 51, reads: “Oh ye who believe!  Take not the Jews and the Christians for your friends and protectors; they are but friends and protectors to each other. And he amongst you that turns to them for friendship is of them. Verily Allah guideth not the unjust.”

Sura 3, verse 28 introduces taquiyya which dictates that Muslims should not befriend infidels except as deception, always with the end goal of converting, subduing, or destroying them.

Brian Kennedy, author of the book Shariah: The Threat to America in a recent address to the Kirby Center for Constitutional Studies and Citizenship in Washington D.C. quoted studies by the Pew Research Center showing that eight percent of American Muslims who took part in the survey said they believed that suicide bombing can sometimes be justified in defense of Islam. Assuming the estimates of 3 million American Muslims in the U.S. this would mean that 240,000 among us hold that suicide bombing in the name of Islam can be justified. Among American Muslims 18-29 years old, 15% agreed with that and 60% said they thought of themselves as Muslim first and Americans second. Also according to the Pew survey 5% (150,000) say they have a favorable view of al Queda.

Given these numbers and the teaching of Islam I believe it quite reasonable to believe that organizations in the U.S. such as the Muslim Brotherhood and the Council on American Islamic Relations represent a real domestic threat and should be treated as such.

The average Muslim in America probably does not understand the Koran in such detail and perhaps the above paints an unfair picture of this “average American Muslim” belief. But it does paint an accurate picture of the teachings of Islam and clearly shows that Islam is different from Christianity or Judaism.

 Islam is making a difference in our world, one body at a time. Islamic terrorists have carried out over 17,000 attacks since September 11, 2001. In April, 2011 alone there were over 150 jihad attacks killing 802 people in 19 countries. What we see among our leaders today is a desire to see Islam as they would like it to be rather than how thousands of Muslims understand it. Islam is not a religion of peace.

The Sin of Profit in America

I have read with amusement the gyrations of the left over reports of Exon Mobile making record profits during the most recent quarter. The blogs are full of what a shameful thing it is during these hard times that a Corporation should be so successful. 11 Billion Dollars profit in just three months. What does it say about our culture when citizens chastise a Company that employs (directly) almost 80,000 people. This does not include the employees of the thousands of companies that work indirectly for Exon. But somehow a company that has a successful business model and employes tens of thousands workers is to be scorned by those on the left.

Of course the reporting of profit is a very shallow look at a company's balance sheet. But shallow is where many in our culture reside. In fact, I've had recent posts about this issue and the response I get is usually personal attacks. What does it say about an argument that is reduced to such response? It tells me that the responder is basing opinion on how they feel about the subject. Not what they think. If they think at all.

In my review of Exon's financial status there are a couple of items that need mention. The first is that while Exon is making a profit they are also paying huge amounts worldwide in taxes. The effective tax rate for Exon Mobile last year was 47% (this of course does not include the taxes paid on gains or dividends by the Company's shareholders). In the last 5 years Exon has paid $59-Billion in taxes. The second item worth mention is that while the politicians are quick to pile on by threatening to remove tax breaks (47% isn't enough of a tax rate for some in the political class) they seem to completely ignore the reality that taxes have consequences. Let's say you tax Exon another 5 or 10 billion. Are the politicians so blinded by their feelings they actually believe that the money would come from Exon? Those taxes would be immediately be passed to the consumer. If gas prices at the pump are not high enough for you, repeal what tax breaks are available to Exon and you'll see more of an increase.

Our President continues to work hard to "spread the wealth around" and that is exactly what a Company like Exon Mobile does. The difference between their efforts and our President's is the President is using the full force of the Federal Government while Exon uses the marketplace where consumers/workers have a choice whether or not to participate.

William Rusher R.I.P.

He changed American politics forever. William Rusher was publisher of the National Review for almost 30 years. I had occasion to lunch with him several times in San Francisco. Several years ago I was doing a radio talk show on a leading station. On more than one occasion I had gleaned material from Mr. Rusher’s work. At one point I wrote to N.R. telling him I was an admirer of his work. About two weeks later I received a phone call inviting me to lunch. Thus began an infrequent but sometimes regular relationship to lunch, discuss politics, even poetry on occasion.

        His political success was highlighted in the 1960’s when he and others successfully launched the Republican Presidential campaign of Barry Goldwater (despite the Arizona Senators loss to LBJ). That move mortally wounded the liberal, east-coast wing of the Republican Party and made way for the Conservatism of Ronald Reagan.

        I shall never forget the warmth and encouragement I received from this man. William (Bill) Rusher was 87. R.I.P.

Why do Government Shut Downs Go Unreported, Mostly?

Is anyone else getting a bit tired of the “government shutdown” hype?  Perhaps it’s time for a little perspective.  So, let me get this straight, non-essential offices of the government will shut down Friday at midnight unless Congress gets some sort of an agreement to continue funding the feds? (I’ll pass the opportunity here to ask why we ever have any government non-essential services).

Let’s assume that most government workers don’t work on Saturday or Sunday anyway so there won’t be much missing of these non-essential services over the weekend. Then comes Monday when these employees providing all these (non-essential) services would suit up and show up to do their duty (non-essentially). But wait, they don’t always work Monday through Friday do they?

Looking at the federal calendar I notice these (non-essential) employees providing these (non-essential) services have eleven federal holidays each and every year. Can we assume that the government is shut down on those days?

So now I’m thinking “so what if we miss a few more days of these non-essential services?” since we don’t have them any Saturday or Sunday or 11 other days out of the year.

Maybe I’m missing something here. If the government is already shut down over 110 days a year what’s so threatening about another shutdown if it might save a few dollars?

How You Too Can Go Broke

Here’s your dilemma:  Your household income is about $60,000 a year yet you are spending $83,662. How long will you last?  It’s hard for any working stiff to get a handle on a federal budget of over $3 trillion so I reduce it to these numbers that may be a little closer to home. Your household income of $60,000 represents the total revenue confiscated from taxpayers by the federal government. Your spending represents the government’s spending.

Would cutting $335 a year out of that almost $84,000 budget make your household solvent? That’s the “extreme” proposal on the table before Congress right now. It’s a proposal the Democrats can’t accept because it’s too extreme. Cutting $335 out of an almost $84,000 annual budget will starve children, kill old people and put hundreds of thousands out of work.

Here’s the question before the country:  can you expect Democrats to be serious about our country’s dire financial crises if they can’t even cut $335 out of an $84,000 budget?

Any wonder why the electorate rejected liberalism (again) in November?

We Are Number One!

I tuned in that evening just as some Hollywood starlet was making an introduction on the darkened stage at yet another awards ceremony out of L.A. She was saying "....here is my very good friend, Chuck Negron". Who? I knew the name I just couldn't grab hold of the identity. Cut to a wide angle shot with a handsome, mustacheod man covered by light from a single spot. He raised the microphone to his mouth and began "One is the lonliest number that you'll ever do....". Now I knew! Chuck Negron, lead singer with Three Dog Night. This was to be one of his very first public appearances after crawling out from under a heroin addiction that took him to the gutter, got him kicked out of a few dozen rehab joints and for several years ended any career he had or hoped to have. His acapella version of that multi-million selling hit that evening was stunning, moving, just downright mind-blowing. Even though I had heard that song a thousand times before I had never really heard it as I did that night. The memory of that performance came back to me this year.

I first noticed the strangeness of this year on the first of January. That's when one started making it's impression. Write the date this way: 1/1/11. Hmmm, interesting. But it got more so when it became 1/10/11 and 1/11/11. Wow, it's definitely a one year. Now look ahead to November. I think you're getting the idea. November 1st becomes 11/1/11. Wait, there's more; salute a veteran on November 11th as we write 11/11/11. Think about the signing of the armistice that ended world war I. Signed in the 11th hour of the 11th day of the 11th month. Oh my gosh. But, what really got me thinking was my birthday this year. No, I wasn't born on the 11th or the 1st of any month. I was born March 4. The only command date of the calendar as a former Army Captain/Mayor of Seaside, CA once told me. It took me several days to figure out what he meant by that. But let's not get off track. I was born in the year 1949 and so I am now 62 years old. So I added '49 and 62 and got.....

See what I mean? One is the lonliest number that you'll ever do but not this year. Not if you were born in 1949.

Join the Pro-Union Fellowship

For those who believe in unions, do not feel that you are alone in history.  There are many men and women who have forged the path that you now follow. Some were leading advisors to soon-to-be President F.D.R.
From the University of Chicago Professor Paul Douglas was part of a trade union delegation to the Soviet Union in 1927. Professor Douglas wrote of that experience "the people's real rights, that is their economic rights, are much better protected than in any other country". Labor leader Sidney Hillman who headed the Amalgamated Clothing Workers shared his positive view of the Soviet Union saying "I have never met a group of people that is so realistic, so practical, so courageous, and so able to handle the greatest job, as the group of people who have charge of the destinies of the Russian nation today". The one time president of the United Mine Workers John Brophy  told Soviet leader Joseph Stalin "the presence of the U.S. trade union delegation to Russia is evidence of the sympathy of a section of the American workers to the workers of the Soviet Union."
The sad reality for our comrades today is the collectivist model so admired in the 1920's and 30's is not around to the return the favor.

Republicans Wrong in Wisconsin?

Watching coverage of the demonstrations in Madison, Wisconsin one would think thousands of hard working Americans are being battered by Republican proposals to put restrictions on collective bargaining by government employees. Perhaps we should look beyond the shouting and sign waving by the state house occupants. The facts may spell good news for working Wisconsinites (and those in other states).
Ohio University economist Richard Vedder has spent decades studying effects of unionism on the work force. In a paper published in August, 2010 he compared employment  in states which require workers to belong to a union and those that don't (Right to Work states).  Here's a quote from that paper:

Four Midwestern forced-unionism states — Michigan, Ohio, Illinois and Indiana — suffered absolute private-sector job declines over the past decade that were worse than those of any of the other 46 states. Midwestern forced-unionism states (the four just mentioned, plus Missouri, Wisconsin and Minnesota) lost a net total of 1.88 million private-sector jobs.
Combined, these seven forced-unionism states had 8.1% fewer private-sector jobs in 2009 than they did back in 1999.
Meanwhile, the five Midwestern Right to Work states (North Dakota, Nebraska, South Dakota, Iowa and Kansas) experienced an overall private-sector job increase of 2.3%.
Moreover, from 1999 to 2009, real personal income in Midwestern Right to Work states grew by 17.3% — an increase two-and-a-half times as a great as the combined real personal income growth in Midwestern forced-unionism states.

So as you see efforts to try and maintain the status quo for unionism in these states may be working against the folks. Perhaps we (and especially they) should be thinking about the impact of those efforts on the entire economy. Are these sign waving protesters really concerned about the working class?

The argument on the pro-union side seems to be that it betters wages and benefits for members. True? No doubt there's anecdotal evidence to support the argument. But what does history show? At a time when unionism was negligible (3% of the American workforce) and manufacturing grew at an incredible 50% (1860-1890) and another 37%( 1890-1937) American workers were so much better off than their  much more heavily unionized counterparts in Europe.

Do union wages increase? Absolutely! Some studies show unionized labor earn wages 15% higher than nonunion employees. These same studies show that wages in general suffer as a result of an economy that is up to 40% smaller than it would have been in the absence of labor unions.

Bottom line for me is this;  shouldn't workers have a choice whether or not they prefer union membership?

Taxpayers Vs. Public Employee Unions

Isn't it curious that public employee unions seem always supportive of higher taxes and more spending. The reasons behind this are somewhat obvious. The more money taken from taxpayers the more likely their employer (the government) will have money to fund even more benefits and higher salaries.

In the private sector businesses hope to increase their income through sales and services desired by the consumer. The big difference  is that business income is from the voluntary exchange with the consumer while government takes money by force. Put another way, the difference between a corporation, or other form of business, and government is guns. If a taxpayer doesn't turn over money to the government the government will take it by force. Using the force of government public employees unions see their own path to wealth and power. Here are examples:

•  California, 2004-Teachers Association, SEIU, Council of Community Health Agencies lead a successful $4.7 million dollar campaign to raise the state's income tax rates. They gave $2.3 million to that cause.
• Washington state, 2010-SEIU and the National Education Association donated $3.4 million to the campaign to impose an income tax in the state.
• New York state, 2008-09, United Teachers Union, the state's health care unions gave $1.75 million to launch a series of attack ads against cuts in medicaid and a cap on property taxes.
• Oregon, 2010-Oregon Education Association, SEIU contribute approximately $5.25 million to pass measures to raise business and income taxes.
• Arizona, 2010-teachers unions and public safety unions influential in supporting sales tax increase from 5.6% to 6.6%.

These are just a few state examples. There are many, many more. Consider your own community. How about nationally? Public Unions are among the biggest players. The Center for Responsive Politics reports the American Federation of State, County and Municipal Employees (AFSCME) has been the third biggest contributor to federal campaigns for the past 20 years. The National Education Association is number 8, the SEIU is number 10. These organizations fund campaigns knowing the results will lead to higher taxes and more power to influence further elections.

I'm still searching for those campaigns that ask for lower taxes and less spending supported by the public employee unions. Whose side are these unions on anyway?  Not the taxpayers!

Note to Public Employees

Did you notice that breath of fresh air that just blew over the political landscape?  I noticed it the day Donald Trump stood before the attendees at the CEPAC convention. Here's a group who has for years cast their votes for Ron Paul as the favorite Republican candidate for President.  The fresh breeze blew across the auditorium when entrepreneur Donald Trump took to the stage and told the gathering "Ron Paul has no chance of being elected President". Now this is something political supporters are not used to, someone told the truth. They reacted accordingly with loud boos and jeers.

It has happened on rare occasion before. I recall seeing news reports of New Jersey Governor Chris Cristy holding a town hall meeting when confronted by a public school teacher. The teacher was lamenting the Governor's plans to cap property taxes and revisit public employees collective bargaining. The teacher claimed he was not compensating her for her education and experience. Governor Cristy replied (are you ready for that fresh breeze?) "well then, you don't have to do it".

Now I see more public employee unions trying to preserve what no private sector employee ever had, increasing pay and benefits in troubled times. I confess I'm a bit tired of hearing these government workers claiming to be public servants. Here's my note to these public servants;  If you really want to serve the public, QUIT YOUR JOB. Decreasing the public payroll would be a real breath of fresh air.