Category Archives: Economics

Obama has state of the delusion speech shovel ready

TAMPA, February 12, 2013 — Pundits are already atwitter over tonight’s annual exercise in political posturing. The question many are asking is whether Obama will stay on the attack against his Republican opponents or attempt to use the speech to identify areas where he can work with them.

The real question is whether the president will make a single remark that bears any resemblance to reality.

The State of the Union address (SOU) has always been little more than a nationally televised stump speech. As all presidents believe that anything happening anywhere in the country is a direct result of their policies, none have ever wanted to paint a less than rosy picture about the supposed “state of the union.” After all, if it’s in a bad state, it must be their fault.

However, with the U.S. now in full-fledged collapse, the speeches have become so detached from reality that they should be called “state of the delusion” addresses.

The speech is interminably long, but let’s look ahead to the main areas it will cover and try to separate fantasy from reality.

The president will remind us that he inherited an economy in shambles, which is true. He will hope that listeners draw the inference that his predecessor was wholly at fault for this, but that isn’t close to true. Every president since at least Teddy Roosevelt contributed to the problem, with the largest contributions coming from Democrats.

It will really turn bizarre when Obama starts talking about “the recovery” that’s underway. We’ll be told that while we’re not out of the woods and there is still “a lot of work to do (i.e., more government meddling to accomplish),” new jobs are being created, new industries are flourishing and things are generally looking up.

In reality, the United States is in a depression, just like the one in the 1930’s, and it’s being prolonged for all of the same reasons. The official numbers say that unemployment has been hovering around 8 percent, but that’s only because they’ve changed the way unemployment is measured. If they measured it the same way that they did in the 1930’s, unemployment would be the same as it was in the 1930’s.

As an aside, there isn’t any substantive economic distinction between “recession” and “depression.” Politicians just decided to stop calling them depressions to con the public. After a while, they started believing their own bovine waste products.

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But aren’t right-to-work laws also unjust?

TAMPA, December 13, 2012 ― As expected, the reaction to Monday’s column about Michigan’s right-to-work legislation inspired spirited discussion.

Weeding out both praise and invective that were unresponsive to my argument, there was a dissent that had merit. It was the libertarian argument that right-to-work laws also violate the rights of employers and employees to make a voluntary contract. An employer should be free to require membership in the union and/or payment of dues as a condition of employment.

Like most libertarians, I agree with that argument in principle, but one cannot evaluate right-to-work laws in a vacuum.

Right-to-work laws and the Taft-Hartley Act from which they proceed are wholly a reaction to the Wagner Act. The proponents of Taft-Hartley first tried to get the Wagner Act repealed. When the Supreme Court ruled Wagner constitutional, conservatives passed Taft-Hartley. If the Wagner Act were not already law, Taft-Hartley would be both unnecessary and unjust.

However, in the context of the Wagner act, neither is necessarily true. A brief allegory will illustrate.

Employer Smith sits down at the bargaining table with Union Jones. The two discuss potential terms of an employment contract, but are unable to reach an agreement. Jones wants more than Smith is willing or able to pay. Smith gets up to walk away.

Just then, Luca Brasi walks up and makes Smith “an offer he can’t refuse.” Brasi puts a gun to Smith’s head and invites him to sit back down, assuring him that at the end of the meeting, either his brains or his signature will be on a collective bargaining agreement.

Brasi is the Wagner Act.

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Michigan unions say no right to work

TAMPA, December 10, 2012 – Lansing, Michigan is bracing for an onslaught of protestors following Republican Governor Rick Snyder’s indication that he would sign “Right to Work” legislation currently making its way through the state legislature. President Obama and Harry Reid have both joined Michigan Democrats in denouncing the bill.

As usual, both liberals and conservatives are already demonstrating their skewed perception of reality in weighing in on this debate. President Obama told workers at an engine plant outside Detroit that “what we shouldn’t be doing is trying to take away your rights to bargain for better wages,” as if the law would do any such thing.

However, Harry Reid surpassed all in obtuseness when he called the legislation a “blatant attempt by Michigan Republicans to assault the collective bargaining process and undermine the standard of living it has helped foster.”

Perhaps the senator should ask the residents of Detroit, an entire city laid waste by New Deal union legislation, how they are enjoying the standard of living it has produced.

Libertarians haven’t been able to say this in quite a while, but the conservatives are mostly right on this one, although perhaps for the wrong reasons.

The only troubling sentiment coming from grassroots conservatives is the animosity towards labor unions themselves. Many seem to believe that the mere existence of labor unions causes economic distortions. Nothing could be further from the truth. Labor unions themselves are not the problem.

Like virtually all human misery, labor market distortions are caused by the government. Specifically in this case, they are rooted in the National Labor Relations Act of 1935 (a.k.a. the Wagner Act).

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Mitt Romney did not pay less in taxes than his secretary (and raising capital gains tax will destroy the economy)

TAMPA, December 1, 2012 ― President Obama and the Democrats were successful in 2012 largely on the strength of some rather outlandish demagoguery. “Billionaires pay fewer taxes than their secretaries” was one slogan that was particularly successful.

The Obama campaign successfully made an issue out of Mitt Romney’s taxes, finally getting Romney to admit that he paid around 13% of his earnings in taxes over the past several years. The “fair share” crowd contrasted this with the higher percentage that would have been paid by a secretary in the 28% bracket, for example, who would still pay more than 13% even after deductions.

That Americans bought this specious argument is more worrisome than that the Democrats made it.

Romney’s tax percentage was low because most of earnings came from capital gains, not income. Capital gains are just what they sound like. They are the appreciation in the value of one’s capital. If you buy a stock at $5 per share and its price goes up to $7 dollars per share, you have realized $2 in capital gains. If you sell that stock at a $2 dollar profit, the government wants a percentage.

Right now, Mitt Romney would pay 35% income tax and 15% on capital gains. The average secretary would pay 15% income tax and 15% on capital gains. So, Romney’s tax liability as a percentage of income is more than double the average secretary’s. His tax liability on capital gains is the same. Obviously, Romney’s nominal tax payments in both categories would exceed the secretary’s by orders of magnitude.

That’s how things actually are out here in the real world.

So why is the tax rate on capital gains lower than on income? Because “capital,” by definition, comes from previously taxed income.

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The fiscal cliff: Another phony emergency to give the government more power

TAMPA, November 27, 2012 – The 24-hour news cycle is dominated with frantic warnings about the “fiscal cliff.” If you merely listen to the sound bites, there is another “emergency” facing the United States of America and only some drastic action by Congress can avert it.

What nonsense. Don’t Americans ever learn anything from even the recent past?

Just four years ago, we were told that if we didn’t allow Congress to give Wall Street almost a trillion dollars of our money, the end of the world would occur. The “bold” legislation was necessary to “save the financial system.” Other than preventing a lot of billionaires who made bad investments from losing their money, I’m not sure what that was supposed to mean.

It didn’t prevent millions of borrowers from losing their homes. That happened anyway.

We were told after 911 that “the world changed” and the 4th, 5th and 6th amendments to the Constitution would have to be trashed. Americans now subject themselves to unreasonable searches without warrant merely for the “privilege” of getting on a plane. They allow presidents to arrest American citizens without a warrant or charges and hold them indefinitely without recourse to a writ of habeas corpus.

The president can even kill American citizens without due process.

It was all supposedly necessary to protect us from…the shoe bomber and the underwear bomber. Both defeated the new government security apparatus and were subdued by private citizens.

Both initiatives were accompanied by a non-stop barrage of media propaganda trumpeting impending doom if the government wasn’t given more power.

The fiscal cliff scam is playing out exactly the same way. Day and night, Americans are bombarded with the same message. If Congress doesn’t do something, the world will end.

There are two components to this supposed disaster. The first is the “draconian cuts” to government spending built into the Budget Control Act of 2011. Supposedly, they will “gut the military,” while plunging the economy back into recession.

There is only one problem. Even if Congress fails to make a deal, nothing is being cut from the federal budget.

Let me repeat that. Nothing is being cut.

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Libertarians vs. Conservatives on the welfare state

TAMPA, October 26, 2012 – Many people think of libertarianism as a subset of conservatism, but that’s not true. Libertarianism and conservatism are completely separate philosophies with distinct and separate philosophical traditions. The philosophical differences result in very different positions on issues, from domestic to foreign policy. Their differences on the welfare state provide a perfect example.

Most Americans believe that President Obama and the liberals believe in wealth redistribution and that Republicans/conservatives are against it. That just doesn’t line up with the facts.

While Republicans make general statements against the welfare state, they actually support 95% of the actual spending. A key plank of the Romney/Ryan campaign is “preserving and protecting Social Security and Medicare.” That’s more than half of welfare spending alone. They also support government subsidization of housing, agriculture, energy and other “job-creating” programs. They are willing to support corporate welfare if they believe it will be good for the overall economy.

The only criticisms Republicans generally make are for social safety nets like TANF. This illustrates a key difference between conservatives and libertarians on welfare.

Libertarians object to the welfare state on this basis: Any taxes collected from citizens are collected under a threat of violence. You pay or you get kidnapped at best, killed resisting at worst. Therefore, libertarians object to using the taxing power to take money from one person or group and give it to another. When individuals do this, it is called “armed robbery.” For libertarians, it is no different when the government does it. It is the crime itself that libertarians object to.

Conservatives see it differently. They don’t object to the crime itself. Rather, they formulate their positions based upon who will receive the benefits. Redistribution to certain types of people is acceptable, to others it is not. That is why they will excoriate the “welfare queen,” whose impact upon the budget is minimal, while fully supporting Social Security and Medicare, which will eventually bankrupt the entire government.

Continue at Communities@ Washington Times…

Libertarians are not corporate apologists

TAMPA, October 22, 2012 – In the wake of Ron Paul’s campaign and with Gary Johnson rising in the polls, libertarianism may just get a hearing for the first time in decades.

Already, the usual fallacies have resurfaced. If you don’t want the government to run education, you must be against education. If you don’t want the government to run healthcare, you must not want people to get healthcare.

This misunderstanding is often summed up with comments like, “I’m not sure I’m comfortable with an ‘every man for himself’ society.” This springs from the absurd assumption that human beings never confer benefits upon one another except when forced to do so at gunpoint.

One corollary of the “every man for himself” theory is that a libertarian society would “let corporations run wild,” resulting in a small, wealthy elite controlling all of the resources and exercising oligarchical rule over the rest of society. (So do we live in a libertarian society now?)

Most people would probably be surprised at the libertarian stand on corporations. In a libertarian society, they wouldn’t exist. Corporations are creatures of the state. They are created by the government and endowed with privileges that individuals do not have. This contradicts a fundamental premise of libertarianism, that all people are created equal and have equal rights.

Continue at Communities@ Washington Times…

Obama and Romney on reviving the economy: Blow up the education bubble

TAMPA, October 18, 2012 – Mitt Romney has been able to cruise through two debates with Barack Obama by utilizing a surprising strategy. When Obama has gone on the attack, citing the “draconian cuts” that the delusional on both sides of the aisle imagine Romney would propose as president, Romney has completely defused the president by simply telling the truth.

He’s not cutting anything.

He went a step further during last night’s debate. Like Obama, Romney is not only refusing to cut a single penny from any government program (other than Big Bird), but he’s now on the record that expanding the welfare state is a key plank in his “job creation” plan. In addition to stating “I want to make sure we keep our Pell Grant program growing,” Romney went on to emphasize the importance of keeping student loans available.

Forget the supposedly conservative principle that it is immoral for the government to force one citizen to put up his money to guarantee loans taken out by another, much less force that citizen to pay another’s tuition outright. That principle is long, long gone from the conservative psyche.

What is disturbing is that neither candidate seems to have any idea that their plans for education will exacerbate a bubble that has all of the same characteristics of the housing bubble.

Continue at Communities@ Washington Times…

Questions Obama and Romney won’t have to answer at tonight’s debate

TAMPA, October 16, 2012 – Tonight, we will be subjected to another presidential “debate,” in which two candidates who agree that government is the solution to everything argue about whose central plan is better. With the questions coming directly from the electorate and super-liberal Candy Crowley deciding which ones to ask, there is not much chance that big government will be challenged by anyone.

Wouldn’t it be refreshing if the candidates were actually asked substantive questions that couldn’t be answered with rehearsed talking points? Here are just a few that you won’t hear asked in any debate or interview:

1. Both of you support U.S. military involvement in the Middle East and elsewhere against nations that have committed no acts of war against the United States. How do you justify planned military action when no state of war exists?

2. Both of you support employing the U.S. military to promote “democracy” in other countries. Why is the U.S. taxpayer financially responsible for the liberty and security of everyone on the planet? When will this financial responsibility end?

3. You both agree that President Obama was right in signing the last NDAA bill which has provisions allowing the arrest and indefinite detention of U.S. citizens by the military without due process. How do you reconcile this policy with the 4th and 5th Amendments to the U.S. Constitution?

4. It is almost universally acknowledged that Social Security and Medicare have unfunded liabilities that can never be paid, with Medicare representing the graver financial threat. Both of you argue that the programs must be preserved. However, don’t U.S. citizens who weren’t even born when these programs were started have a right to opt out of them, if they agree to waive all benefits in exchange for not being required to pay in? Would you sign a bill allowing younger workers to opt out under those conditions?

Continue at Communities@ Washington Times…

Romney-Obama debate as competitive as professional wrestling

TAMPA, October 4, 2012 — The early consensus after last night’s debate between President Obama and Republican presidential nominee Mitt Romney is that it was a win for Romney. That depends upon how you define “win.”

Certainly, Romney came off as more confident in his answers, while the president seemed distracted at times. However, if this was a battle of ideas, then the outcome was about as uncertain as professional wrestling. Anyone who was listening could tell that this wasn’t a real fight. Big government was the predetermined winner the minute that Romney was nominated.

Yes, Romney made a few references to “competition” and “private markets,” as did Obama. But neither of them is interested in giving free markets a try. In that sense, Obama was at least a little more honest, except when he made the ironic statement that “the genius of America is the free enterprise system.”

The first segment concerned the economy and “creating jobs,” something the government has no role in whatsoever in a free market. The only valid government policy to create jobs from a free market perspective is one that stops the government from doing what it’s already doing. Neither man proposed this.

For many decades, the federal government has employed the same ruse in an attempt to centrally plan the economy while at the same time claim it is fostering free enterprise.

Step One: Tax the living daylights out of everybody and everything.

Step Two: Give “targeted tax cuts” to firms in sectors the central planners think should grow.

Continue at Communities@ Washington Times…