02 May, 2017

The Moral Case for Tax Cuts

The Moral Case for Tax Cuts
The ownership of tax money before the government confiscates it is a moral consideration, or at least ought to be.

A. Barton Hinkle
May. 1, 2017 12:01 pm

Say you walk into a store one day and there's a big sign inside: "Everything Now 20 Percent Off." What is your reaction?

(a) "This is great! I am going to save some money today!"

(b) "This is terrible! I demand to know how the store is going to make up the revenue. And I am outraged, because people who are richer than I am buy more stuff, which means they will save more money than I do!"

If you are a normal person, your reaction is more likely to resemble (a). But a lot of people—including most members of the media—apparently have a reaction more like (b), at least when the subject turns to taxes.

On Wednesday, President Trump laid out some general themes for tax reform, including cuts in the rates for corporations and small businesses and a hike in the standard deduction for individuals. The reactions were telling—and even a bit surreal.

Much discussion revolved around how much the tax cuts would cost. That is a funny question to ask, from the taxpayer's perspective. From the taxpayer's perspective, a tax cut doesn't cost anything. Like a price cut at a department store, it saves you money.

The only entity for whom a tax cut could be considered a cost is the federal government. But an impressive number of people in the media also see it that way, which tells you much about where their sympathies lie.

Along the same lines, debate erupted over whether Trump's plan would "pay for itself," a discussion Republicans foolishly invited with the Laffer Curve. So you get policy wonks arguing over whether the Congressional Budget Office should judge tax proposals using static scoring or dynamic scoring, and just how much we can expect the economy to grow under scenarios A, B, and C, and so on.

All great fun for those who see politics as a team sport. The trouble with such an approach, though, is that it turns taxation into a purely utilitarian issue, and one in which every perspective is just as valid as any other.

Which is simply not the case. Imagine a stranger walked up to you on the street and said, "Let's talk about the best way to spend your paycheck, shall we?" You would be entirely justified in replying, "Buddy, that's none of your damn business. Now go away before I call the police."

Most discussions of tax policy overlook a crucial initial condition: the ownership of the money before the government confiscates it. That is a moral consideration, or at least it ought to be. Pundits go on at great length debating whether the government can afford to let people keep a bit more of their own money. Very few ever ask whether the taxpayer can afford the high cost of government.

Sure, partisan hypocrisy enters the equation. Republicans don't care much about deficits unless Democrats are in charge, and vice versa. Let's take that as a given and set it aside for another time.

Any discussion of tax policy ought to start with the recognition that taxation entails taking the earnings of some people for the benefit of others. We need some level of taxation; government can't function without it. But the level should be kept as low as possible.

The standard objection here involves noting that tax cuts benefit the rich. Well, yes—they do. That is because the rich pay most of the taxes in the first place. The wealthiest 20 percent of American households earn 51 percent of all U.S. income but pay 66 percent of all income taxes. The bottom 45 percent of Americans pay no income tax at all. It is hard to cut taxes for people who don't pay them.

This is, indeed, a question about greed. But not in the way it is normally framed. As George Mason University economics professor Donald Boudreaux once said, it's an odd value set that considers "I want what's mine" to be selfish and greedy but "I want what's yours" to be selfless and noble.

Over the next two decades federal spending is set to soar from 20 percent of GDP to 28 percent, and much of that spending growth is on automatic pilot. Nobody ever asks how that spending is going to "pay for itself." Given that taxes already cost Americans more than food, clothing, and shelter combined, maybe they should.

30 March, 2017

Stossel: Free Market Health Care

Free Market Health Care
Government involvement in health care drives prices up.

John Stossel|Mar. 29, 2017 12:01 am

President Trump and Paul Ryan tried to improve Obamacare. They failed.

Trump then tweeted, "ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!"

But I do worry.

Trump is right when he says that Obamacare will explode.

The law mandates benefits and offers subsidies to more people. Insurers must cover things like:
  • Birth control.
  • Alcohol counseling.
  • Depression screening.
  • Diet counseling.
  • Tobacco use screening.
  • Breastfeeding counseling.
Some people want those things, but mandating them for everyone drives up costs. It was folly to pretend it wouldn't.

Insisting that lots of things be paid for by someone else is a recipe for financial explosion.

Medicare works that way, too.

When I first qualified for it, I was amazed to find that no one even mentioned cost. It was just, "Have this test!" "See this doctor!"

I liked it. It's great not to think about costs. But that's why Medicare will explode, too. There's no way that, in its current form, it will be around to fund younger people's care.

Someone else paying changes our behavior. We don't shop around. We don't ask, "Do I really need that test?" "Is there a place where it's cheaper?"

Hospitals and doctors don't try very hard to do things cheaply.

Imagine if you had "grocery insurance." You'd buy expensive foods; supermarkets would never have sales. Everyone would spend more.

Insurance coverage -- third-party payment -- is revered by the media and socialists (redundant?) but is a terrible way to pay for things.

Today, 7 in 8 health care dollars are paid by Medicare, Medicaid or private insurance companies. Because there's no real health care market, costs rose 467 percent over the last three decades.

By contrast, prices fell in the few medical areas not covered by insurance, like plastic surgery and LASIK eye care. Patients shop around, forcing health providers to compete.

The National Center for Policy Analysis found that from 1999 to 2011 the price of traditional LASIK eye surgery dropped from over $2,100 to about $1,700.

Obamacare pretended government controls could accomplish the same thing, but they couldn't.

The sickest people were quickest to sign up. Insurance companies then raised rates to cover their costs. When regulators objected, many insurers just quit Obamacare.

This month Humana announced it'll leave 11 states.

Voters will probably blame Republicans.

Insurance is meant for catastrophic health events, surprises that cost more than most people can afford. That does not include birth control and diet counseling.

The solution is to reduce, not increase, government's control. We should buy medical care the way we buy cars and computers -- with our own money.

Our employers don't pay for our food, clothing and shelter; they shouldn't pay for our health care. They certainly shouldn't get a tax break for buying insurance while individuals don't.

Give tax deductions to people who buy their own high-deductible insurance.

Give tax benefits to medical savings accounts. (Obamacare penalizes them.)

Allow insurers to sell across state lines. Current law forbids that, driving up costs and leaving people with fewer choices.

What about the other "solution" -- Bernie Sanders' proposal of single-payer health care for all? Sanders claims other countries "provide universal health care ... while saving money."

But that's not true.

Well, other countries do spend less. But they get less.

What modern health care they do get, they get because they freeload off our innovation. Our free market provides most of the world's new medical devices and medicines.

Also, "single-payer" care leads to rationing.

Here's a headline from Britain's Daily Mail: "Another NHS horror story from Wales: Dying elderly cancer patient left 'screaming in pain' ... for nine hours."

Britain's official goal is to treat people four months after diagnosis. Four months! That's only the "goal." They don't even meet that standard.

Bernie Sanders' plan has been tried, and it's no cure.

If it were done to meet American expectations, it would be ludicrously expensive. In 2011, clueless progressives in Bernie's home state of Vermont voted in "universal care." But they quickly dumped it when they figured out what it would cost. Didn't Bernie notice?

It's time to have government do less.

12 January, 2017

George Will: A Plan to Make America 1953 Again

A plan to make America 1953 again

By George F. Will Opinion writer December 28, 2016

It is axiomatic that if someone is sufficiently eager to disbelieve something, there is no Everest of evidence too large to be ignored. This explains today’s revival of protectionism, which is a plan to make America great again by making it 1953 again.

This was when manufacturing’s postwar share of the labor force peaked at about 30 percent. The decline that began then was not caused by manufactured imports from today’s designated villain, China, which was a peasant society. Rather, the war-devastated economies of competitor nations were reviving. And, domestically, the age of highly technological manufacturing was dawning.

Since 1900, the portion of the U.S. workforce in agriculture has declined from 41 percent to less than 2 percent. Output per remaining farmer and per acre has soared since millions of agricultural workers made the modernization trek from farms to more productive employment in city factories. Was this trek regrettable?

According to a Ball State University study, of the 5.6 million manufacturing jobs lost between 2000 and 2010, trade accounted for 13 percent of job losses and productivity improvements accounted for more than 85 percent: “Had we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers [in 2010]. Instead, we employed only 12.1 million.” Is this regrettable? China, too, is shedding manufacturing jobs because of productivity improvements.

Douglas A. Irwin of Dartmouth College notes that Chinese imports may have cost almost 1 million manufacturing jobs in nearly a decade, but “the normal churn of U.S. labor markets results in roughly 1.7 million layoffs every month.” He notes that there are more than 45 million Americans in poverty, “stretching every dollar they have.” The apparel industry employs 135,000 Americans. Can one really justify tariffs that increase the price of clothing for the 45 million in order to save some of the 135,000 low-wage jobs? Anyway, if tariffs target apparel imports from China, imports will surge from other low-wage developing nations.

The Wall Street Journal’s Greg Ip, who reports that there are 334,000 vacant manufacturing jobs, says that when Jimmy Carter tried to protect U.S. manufacturers by restricting imports of Japanese televisions, imports from South Korea and Taiwan increased. When those were restricted, manufacturers in Mexico and Singapore benefited.

In his book “An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy,” Marc Levinson recalls the 1970 agonies about Japanese bolts, nuts and screws. Under the 1974 Trade Act, companies or unions claiming “serious injury” — undefined by the law — from imports could demand tariffs to price the imports out of the market. Of the hundreds of U.S. bolt, nut and screw factories, some were, Levinson writes, “highly automated, others so old that gloved workers held individual bolts with tongs to heat them in a forge.” A three-year, 15 percent tariff enabled domestic producers to raise their prices, thereby raising the costs of many American manufacturers. By one estimate, each U.S. job “saved” cost $550,000 as each bolt-nut-screw worker was earning $23,000 on average annually. And by the mid-1980s, inflation-adjusted sales of domestic makers were 15 percent below the 1979 level.

Levinson notes that Ronald Reagan imposed “voluntary restraints” on Japanese automobile exports, thereby creating 44,100 U.S. jobs. But the cost to consumers was $8.5 billion in higher prices, or $193,000 per job created, six times the average annual pay of a U.S. autoworker. And there were job losses in sectors of the economy into which the $8.5 billion of consumer spending could not flow. The Japanese responded by sending higher-end cars, from which they made higher profits, which they used to build North American assembly plants and to develop more expensive and profitable cars to compete with those of U.S. manufacturers.

In 2012, Barack Obama boasted that “over a thousand Americans are working today because we stopped a surge in Chinese tires.” But this cost about $900,000 per job, paid by American purchasers of vehicles and tires. And the Peterson Institute for International Economics says that this money taken from consumers reduced their spending on other retail goods, bringing the net job loss from the job-saving tire tariffs to about 2,500. And this was before China imposed retaliatory duties on U.S. chicken parts, costing the U.S. industry $1 billion in sales. Imports of low-end tires from Thailand, Indonesia, Mexico and elsewhere largely replaced Chinese imports.

The past is prologue. The future probably will feature many more such self-defeating government interventions in the name of compassion as protectionist America tries to cower its way to being great again.

29 December, 2016

Thomas Sowell Quotes

Thomas Sowell has been featured numerous times on this blog - he has an amazing ability to simplify complicated issues and provide context to evaluate policy proposals.

Sowell announced his retirement last weekend.  In honor of his retirement, Townhall.com compiled a 'best of' collection of his thoughts over the years...

1. People who enjoy meetings should not be in charge of anything.

2. If you have always believed that everyone should play by the same rules and be judged by the same standards, that would have gotten you labeled a radical 60 years ago, a liberal 30 years ago and a racist today.

3. Immigration laws are the only laws that are discussed in terms of how to help people who break them.

4. Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.

5. The next time some academics tell you how important diversity is, ask how many Republicans there are in their sociology department.

6. The most basic question is not what is best, but who shall decide what is best.

7. The biggest and most deadly 'tax' rate on the poor comes from a loss of various welfare state benefits - food stamps, housing subsidies and the like - if their income goes up.

8. The real minimum wage is zero.

9. What 'multiculturalism' boils down to is that you can praise any culture in the world except Western culture - and you cannot blame any culture in the world except Western culture.

10. In liberal logic, if life is unfair then the answer is to turn more tax money over to politicians, to spend in ways that will increase their chances of getting reelected.

11. People who have time on their hands will inevitably waste the time of people who have work to do.

12. Elections should be held on April 16th- the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders.

29 November, 2016

Sowell: Football and Fallacies

Football and Fallacies

Thomas Sowell
Posted: Nov 23, 2016 7:11 PM

This is a football story with both political and legal implications.

It was fourth down in a National Football League game, and the punting team came onto the field. The other team went into their formation to defend against the punt. Then somebody noticed that the man set to kick the punt was black.

"Fake!" one of the defenders cried out. That cry was immediately echoed by others, and the defending team changed their formation, to guard against the kicker either running with the ball or throwing it. But in fact he punted.

Why did anyone think he was not going to punt the ball? Because chances are no one on that field had ever seen a black football player kick a punt. As someone who has watched NFL games for half a century, I have never seen a black player either punt the ball, or kick a field goal or a point after touchdown.

I have seen hundreds of black players score touchdowns, but not one kick the point afterwards. I have seen a black President of the United States before I have seen a black kicker in the NFL.

Politicians, the intelligentsia and even the Supreme Court of the United States have been saying for decades that statistical disparities between racial groups indicate discrimination. If so, then the racial disparities among kickers in professional football exceed that in virtually any other job anywhere.

But is it discrimination? The very same people who employ blacks at every other position on a football team are the people who hire kickers. Why would they be willing to hire black players in other positions that pay a lot more money than most kickers get, but draw the line at hiring black kickers?

In this situation, discrimination is an explanation that doesn't even meet the test of plausibility.

At the other end of the ideological spectrum, there are those who attribute differences in racial representation to genetics. Are blacks genetically incapable of kicking a football? Somehow black colleges have been playing football for generations, without having to recruit white players to do the kicking.

But if neither race nor racism can explain why black kickers are so rare in professional football, what can possibly explain it? One of the most obvious possibilities is routinely ignored in many cases of group disparities: Different individuals and groups have different things they want to do.

If black youngsters who are dreaming of an athletic career don't happen to be dreaming of becoming kickers, then it doesn't matter whether they have both the innate ability and the opportunity.

It is very doubtful if any of the guys who grew up in my old neighborhood in Harlem ever became ballet dancers. Is that because black guys can't dance? Some of the best male tap dancers have been black. Is it because nobody would hire black male dancers? Some black male tap dancers have starred on the stage and danced in movies. Just not in ballets.

Many of us have been so brainwashed over the years -- by sheer repetition, rather than by either logic or empirical tests -- that statistical disparities are automatically taken to mean discrimination, whether between races, sexes or whatever.

The plain fact that different individuals and groups make different choices is resolutely ignored, because it does not fit the prevailing preconceptions, or the crusades based on those preconceptions.

Women make different career choices than men, and wisely so, because men do not become mothers, and being a mother is not the same as being a father. And we can't make them the same by simply calling them both "parents" or saying that "the couple" is pregnant.

Discrimination can certainly cause statistical disparities. But statistical disparities do not automatically mean discrimination.

When some racial or ethnic groups have a median age that is 20 years older than the median age of some other racial or ethnic groups, how surprised should we be to find members of the younger groups far better represented in sports and members of the older groups far better represented in jobs that require long years of experience?

Statistics are no substitute for thought -- certainly not in government policies, and especially not in Supreme Court decisions.

22 November, 2016

Sowell: Backward-Looking 'Progressives'

Backward-Looking 'Progressives'

Thomas Sowell
Posted: Nov 22, 2016 12:01 AM

People who call themselves "progressives" claim to be forward-looking, but a remarkable amount of the things they say and do are based on looking backward.

One of the maddening aspects of the thinking, or non-thinking, on the political left is their failure to understand that there is nothing they can do about the past. Whether people on the left are talking about college admissions or criminal justice, or many other decisions, they go on and on about how some people were born with lesser chances in life than other people.

Whoever doubted it? But, once someone who has grown up is being judged by a college admissions committee or by a court of criminal justice, there is nothing that can be done about their childhood. Other institutions can deal with today's children from disadvantaged backgrounds, and should, but the past is irrevocable. Even where there are no economic differences among various families in which children are raised, there are still major differences in the circumstances into which people are born, even within the same family, which affect their chances in later life as adults.

For example, among children of the same parents, raised under the same roof, the first born, as a group, have done better than their later siblings, whether measured by IQ tests or by becoming National Merit Scholarship finalists or by various other achievements.

The only child has also done better, on average, than children who have siblings. The advantage of the first born may well be due to the fact that he or she was an only child for some time, perhaps for several formative years.

By the time people have grown up and apply to college, all that is history. Nothing that a college admissions committee can do will change anything about their childhoods. The only things these committees' decisions can affect are the present and the future. This is not rocket science.

Nevertheless, there are people who urge college admissions committees to let disadvantaged students be admitted with lower test scores or other academic indicators.

Those who say such things seldom even attempt to see what the actual consequences of such policies have been. The prevailing preconceptions -- sometimes called what "everybody knows" -- are sufficient for them.

Factual studies show that admitting students to institutions whose standards they do not meet often leads to needless academic failures, even among students with above average ability, who could have succeeded at other institutions whose standards they do meet.

The most comprehensive of these studies of Americans is the book "Mismatch" by Sander and Taylor. Similar results in other countries are cited in my own book, "Affirmative Action Around the World."

When it comes to criminal justice, there is much the same kind of preoccupation on the left with the past that cannot be changed. Murderers may in some cases have had unhappy childhoods, but there is absolutely nothing that anybody can do to change their childhoods after they are adults.

The most that can be done is to keep murderers from committing more murders, and to deter others from committing murder. People on the left who want to give murderers "another chance" are gambling with the lives of innocent people. That is one of many other examples of the cruel consequences of seemingly compassionate decisions and policies.

Ironically, people on the left who are preoccupied with the presumably unhappy childhoods of murderers, which they can do nothing about, seldom show similar concern about the present and future unhappy childhoods of the orphans of people who have been murdered.

Such inconsistencies are not peculiar to our time, though they seem to be more pervasive today. But the left has been trying, for more than 200 years, to mitigate or eliminate punishments in general, and capital punishment in particular. What is peculiar to our time is the degree to which the views of the left have become laws and policies.

A long overdue backlash against those views has begun in some Western nations, of which the recent election results in the United States are just one symptom. How all this will end is by no means clear. Just as the past cannot be changed, so the future cannot be predicted with certainty.

14 November, 2016

‘Not My President’ Proves Liberal Love For Democracy Is Just A Ruse

‘Not My President’ Proves Liberal Love For Democracy Is Just A Ruse

Liberals who chest-thump about the integrity of our political institutions are frequently eager to discredit those same political institutions when it suits their purposes.

By Daniel Payne
November 14, 2016

The months leading up to the 2016 presidential election included a great deal of freaking out over the possibility that Donald Trump and his followers might not “accept” the election results. This was seen as a dangerous attack on the sanctity of American elections and the stability of the American political order.

After Trump’s smashing victory, however, the tables were turned: it was suddenly liberals who were unwilling to “accept” the results of November 8. To be fair, Hillary Clinton and the rest of the establishment seemed willing to concede the legitimacy of the election readily enough, but much of the liberal base was having none of it.

This is actually a regular feature of American politics. For all its hand-wringing after Trump waffled about “accepting” the election results, the Left itself is often noticeably unwilling to tolerate any displeasing election results. Liberals who are outwardly the most concerned about the integrity of our political institutions are the same people who are frequently most eager to discredit those same political institutions when it suits their purposes.
I Reject Reality and Substitute My Own

Case in point: in the aftermath of Tuesday’s election, the slogan “not my president” began spreading like wildfire throughout the liberal ranks. It was termed a “liberal rallying cry.” Multiple protesters were arrested in multiple states. In California, students walked out of their high school declaring “Not my president!” College students said the same thing. Vandalism and mayhem were present at many protests. Some protesters burned Trump in effigy while chanting the slogan.

It would be bad enough if this whole “not my president” meme were a one-time thing. But this has happened before: liberal hatred of former president George W. Bush was so strong in 2000 and 2004 that anti-Bush liberals created a T-shirt declaring that Bush was “not my president.” If you have any clear memories of the Bush years, you will probably recall at least one liberal (and likely many of them) saying of Bush, “He’s not my president.” This was a relentless slogan during Bush’s two terms.

But of course Bush was every American’s president, and soon Trump will be, too. That’s how U.S. elections work, even if the Left isn’t willing to accept it.
Also, Elections Are Rigged!

Some of this can be chalked up to rhetorical excess. But plenty of people genuinely seem to mean it when they say a Republican is “not my president.” You can see this sincere conviction in the way liberals often accuse presidential elections of being corrupt, fraudulent, and rigged.

Liberal accusations of rigged elections have been rampant in the wake of Tuesday’s results. Many progressives seemed to believe “voter suppression” was a key factor in helping Trump win. There was apparently something called a “war on voting rights” that may have given Trump a boost. Vox’s Ezra Klein heavily implied that the Electoral College is a rigged affair. So did Phillip Bump at the Washington Post. So did George Takei. So did around four million people who demanded that the Electoral College “ignore [the] states’ votes” and elect Hillary Clinton president on December 19.

But—again—we’ve seen this behavior before. After the 2000 election, liberals went bananas insisting the system had been rigged to favor Bush. Clinton herself implied as much! This “rigged” election had such an indelible effect on the liberal psyche that they’re still talking about it years later. After the 2004 election, John Kerry allegedly told at least one person he believed the election was stolen from him. An article in the New Yorker last year restated Kerry’s paranoid conspiracy theory

The message is clear: if a Republican insists that an election is rigged, it’s dangerous and reckless rhetoric. But if a liberal insists that an election is rigged, it’s fine.
I’m Taking My Ball and Leaving!

Then there is liberals’ ever-present threat to leave the country if a Republican wins an election. Anyone is free to leave the country for whatever reason he desires, of course. But there is a weird unseemliness to making such a threat just because an election didn’t go the way you like. Many progressives who simply can’t stand the thought of living in the United States under a Republican president seem to be tacitly implying that the American political system is, practically speaking, unacceptable and worthy of abandonment.

One almost gets the feeling that liberals aren’t really all that scandalized by accusations of “rigged” elections; they only pretend to be so if a Republican is making the accusations. When faced with an election result they don’t like, the Left seems delighted to delegitimize every last shred of American political integrity they can find.

Perhaps a reasonable conclusion is this: modern progressives don’t really care all that much about protecting and preserving America’s political institutions. They just care about securing power for themselves, and they are perfectly willing to be duplicitous to secure that power.

Why is liberalism so concerned with getting power and so willing to debase the American political system to get it? One possibility is the life-and-death, apocalyptic style of liberal politics. In many cases, the Left styles elections as the choice between a liberal political savior and a conservative demon. The implication is always that, if the conservative wins, then America will turn into a kind of continent-wide Nazi Germany. Looked at from this angle, it’s not hard to see why many progressives might believe that the ends justify the means: they’ll do whatever it takes to keep Republican Hitlers out of the White House.

Or maybe there is a lower and baser explanation than that: perhaps the progressive impulse, generally speaking, is one that views policy as secondary or even tertiary to the quest for power. Maybe power in political terms is less the means for the Left and more the end. How that power is used once in office is not a primary concern so long as someone with a “D” next to his name is wielding the power. If this is true, we should be grateful whenever a conservative wins an election, regardless of how much liberals melt into hysterics.

Of course, there is an upside to one feature of this: if many liberals do follow through with their threats to flee the country, the probability of our having to deal with this stuff drops accordingly. So perhaps we should encourage that.

Daniel Payne is a senior contributor at The Federalist. He currently runs the blog Trial of the Century, and lives in Virginia.

15 August, 2016

The Cure for Wage Stagnation - Lower Corporate Taxes

The Cure for Wage Stagnation
A plethora of studies from around the world agree: Lower corporate tax rates equal higher wages.

Kevin A. Hassett and Aparna Mathur
Aug. 14, 2016 5:40 p.m. ET

The populist anger of this election cycle stems, at least in part, from consistently bad economic news. While the overall U.S. economy has been inching forward, most peoples’ lives have barely been improving at all. The average hourly wage for manufacturing workers was $20.83 in June 2006, in current dollars, according to Bureau of Labor Statistics data. Adjusted for inflation, it is only about a dollar higher today.

The dissatisfaction of working-class voters in both parties is understandable. Yet this presents a once in a lifetime policy opportunity. If the next president has a plan to increase wages that is based on well-documented and widely accepted empirical evidence, he should have little trouble finding bipartisan support. If politicians in Washington oppose the president’s ideas, he can, as Ronald Reagan did, go over their heads to the outraged voters.

Fortunately, such a plan exists. Regardless of who is elected in November, workers from both parties should unite and demand a cut in corporate tax rates. The economic theory behind this proposition is uncontroversial. More productive workers earn higher wages. Workers become more productive when they acquire better skills or have better tools. Lower corporate rates create the right incentives for firms to give workers better tools.

Leaders from both parties have proposed lowering America’s 35% corporate tax rate, the highest in the developed world. President Obama has called for cutting it to 28% (25% for manufacturers), while Donald Trump proposes 15%. Hillary Clinton is the outlier. To the detriment of her working-class supporters, she has failed to back even a minor cut to corporate taxes.

What proof is there that lower corporate rates equal higher wages? Quite a lot. In 2006 we co-wrote the first empirical study on the direct link between corporate taxes and manufacturing wages. Our approach was highly intuitive and drew on a large literature exploring who really pays the taxes that government collects.

Back then it was widely accepted, for example, that sales taxes are not necessarily paid by consumers. If the government charges a 10% sales tax, goods prices might go up 10%, in which case consumers would pay the whole tax. On the other hand, goods prices might go up by less than 10%, in which case the retailer would have smaller profits. Processing massive quantities of data, economists found by the early 2000s that prices tend to go up about one for one with sales taxes. Sales taxes are thus borne mostly by consumers, not firms.

We applied a similar method to study the impact of corporate taxation on the wages of blue-collar workers. If a higher corporate tax reduces the return to capital, then capital may move abroad. This outflow could reduce the productivity and compensation for domestic workers, who are relatively immobile. So just as a sales tax might have an impact on the final goods price, a higher corporate tax might have an impact on wages. If wages go down when corporate taxes go up, the worker is left holding the tax bag.

Our empirical analysis, which used data we gathered on international tax rates and manufacturing wages in 72 countries over 22 years, confirmed that the corporate tax is for the most part paid by workers.

This result was controversial at first, and appropriately so. Scientific and economic progress flows from attempts to question and replicate. There has since been a profusion of research that confirms that workers suffer when corporate tax rates are higher.

In a 2007 paper Federal Reserve economist Alison Felix used data from the Luxembourg Income Study, which tracks individual incomes across 30 countries, to show that a 10% increase in corporate tax rates reduces wages by about 7%. In a 2009 paper Ms. Felix found similar patterns across the U.S., where states with higher corporate tax rates have significantly lower wages. In another 2009 paper, Ms. Felix and co-author James R. Hines of the University of Michigan discovered that the effects of lower tax rates are especially strong for union workers.

Confirmation has come in a number of additional settings. Harvard University economists Mihir Desai, Fritz Foley and Michigan’s James R. Hines have studied data from American multinational firms, finding that their foreign affiliates tend to pay significantly higher wages in countries with lower corporate tax rates. A study by Nadja Dwenger, Pia Rattenhuber and Viktor Steiner found similar patterns across German regions, and a study by Clemens Fuest, Andreas Peichl and Sebastian Siegloch found the same across German municipalities.

The most recent paper to find significant effects on wages was released in May and will soon be published by Canadian economists Kenneth McKenzie and Ergete Ferede. They found that wages in Canadian provinces drop by more than a dollar when corporate tax revenue is increased by a dollar. Similar patterns have been identified when Canadian economists have studied individual-level income data.

These studies and others convincingly demonstrate that higher wages are relatively easy to stimulate for a nation. One need only cut corporate tax rates. Left and right leaning countries have done this over the past two decades, including Japan, Canada and Germany. Yet in the U.S. we continue to undermine wage growth with the highest corporate tax rate in the developed world.

Why are we stuck in such a bad place? A key factor has been the intransigence of Democratic politicians, such as Mrs. Clinton, whose plan to increase wages is to keep taxes high at the corporate level, increase taxes on business income at the individual level, and to punish firms that move overseas in response to these high taxes.

This anti-corporate policy may be music to the ears of supporters of Bernie Sanders and Elizabeth Warren and the Democratic Party’s left wing, but it will make the lives of ordinary Americans worse. Wage growth will continue to be disappointing as long as the U.S. has the world’s highest corporate tax rate. Denying the need for lower corporate rates may be effective populism, but it is causing real harm to America’s workers.

Mr. Hassett is director of research for domestic policy at the American Enterprise Institute, where Ms. Mathur is a resident scholar.

29 July, 2016

George Will - Is anemic growth the new normal?

Is anemic growth the new normal?

By George F. Will Opinion writer July 8


America’s economy has now slouched into the eighth year of a recovery that demonstrates how much we have defined recovery down. The idea that essentially zero interest rates are, after 7½ years, stimulating the economy “strains credulity,” says James Bullard, president of the Federal Reserve Bank of St. Louis. But last month he and other members of the Federal Reserve Board understandably felt constrained to vote unanimously to continue today’s rates for an economy that created just 38,000 jobs in May, and grew just 0.8 percent in the first quarter, after just 1.4 percent in the previous quarter.

The grim news is not that the economy continues to resist returning to normal. Rather, it is that this “current equilibrium” (Bullard’s phrase) is the new normal. If 2 percent growth is, as he says, “the most likely scenario” for the foreseeable future, the nation faces a second consecutive lost decade — one without a year of 3 percent growth.

N. Gregory Mankiw, Harvard economist and chairman of George W. Bush’s Council of Economic Advisers, writes in the New York Times that in the past decade the growth rate of the real gross domestic product per person averaged 0.44 percent, down from the historical norm of 2 percent: At 2 percent, incomes double every 35 years; at 0.44 percent, about every 160 years.

With the recovery aging, Larry Summers, former treasury secretary, guesses that “the annual probability of recession is 25 to 30 percent.” When it arrives in a near-zero interest rate environment, the Fed’s monetary policy, normally its countercyclical weapon — it usually reduces rates at least four percentage points in a recession — will be unable to cushion the shock.

Bullard says “labor market data is giving us different” — he means more encouraging — “signals than the GDP data.” But surely the fact that the official unemployment rate is down to 4.7 percent is less important than this: The workforce participation rate has plunged, which has been only partly because of the population aging — baby boomers retiring. If labor participation were as high as when Barack Obama became president, the unemployment rate would be over 9 percent.

Besides, it is unclear how to distill the significance of traditional data for an untraditional economy. For example, 7-year old Uber, with just 6,700 employees (not counting drivers), has a public market valuation ($68 billion) $13.8 billion more than that of Ford Motor Co. (201,000 employees globally).

Certainly very low interest rates, by driving liquidity into equities and assets in search of higher yields, are exacerbating the inequality that is disturbing American politics with distributional conflicts. Homeowners, and the 10 percent of Americans who hold 81 percent of the directly and indirectly owned stocks (the stock market is 160 percent higher than its 2009 low), are prospering. Those whose wealth comes from wages — formerly, the Democratic Party’s base — are losing ground. No wonder Hillary Clinton vows to “expand” Social Security, never mind its rickety financial architecture.

The public’s perception, and perhaps the Fed’s conceit, is that the Fed “manages” the economy. “We are,” Bullard says, “our own worst enemy.” By taking credit when things go well, it acquires responsibility in the public’s mind “for everything that happens.”

Bullard says “the most disturbing number” about the economy is that for five years productivity has grown only half a percent a year. Still, he is not among those who are in a defensive crouch about immigration: “We have a great thing happening in that a lot of people want to come here and work.”

Neither does he subscribe to Robert Gordon’s hypothesis (developed in “The Rise and Fall of American Growth”) that we must abandon the unrealistic growth expectations we acquired as a result of an exceptional century (1870-1970) of transformative developments (e.g., electrification, the internal combustion engine, urban sanitation) that have no foreseeable analogues. Bullard imagines someone a millennium ago saying: Fire has been harnessed, the wheel and agriculture have been invented — we already have most of the possible growth from new technologies.

Besides, Bullard says, it takes a while for technologies to “diffuse through the economy.” And some of the diffusion — in leisure, in richer living experiences (social media; smartphones and their apps) — is not captured in GDP statistics. Perhaps that helps to explain why Obama’s job approval has reached 52 percent at a moment when she who seeks to replace him concedes that the economy is so anemic that her husband will be assigned to “revitalize” it.

15 July, 2016

Forced Diversity vs. Human Nature

A friend sent me this article, and I think it is as applicable today as it was when it was written in 2003.

People Like Us
David Brooks

Maybe it's time to admit the obvious. We don't really care about diversity all that much in America, even though we talk about it a great deal. Maybe somewhere in this country there is a truly diverse neighborhood in which a black Pentecostal minister lives next to a white anti-globalization activist, who lives next to an Asian short-order cook, who lives next to a professional golfer, who lives next to a postmodern-literature professor and a cardiovascular surgeon. But I have never been to or heard of that neighborhood. Instead, what I have seen all around the country is people making strenuous efforts to group themselves with people who are basically like themselves.

Human beings are capable of drawing amazingly subtle social distinctions and then shaping their lives around them. In the Washington, D.C., area Democratic lawyers tend to live in suburban Maryland, and Republican lawyers tend to live in suburban Virginia. If you asked a Democratic lawyer to move from her $750,000 house in Bethesda, Maryland, to a $750,000 house in Great Falls, Virginia, she'd look at you as if you had just asked her to buy a pickup truck with a gun rack and to shove chewing tobacco in her kid's mouth. In Manhattan the owner of a $3 million SoHo loft would feel out of place moving into a $3 million Fifth Avenue apartment. A West Hollywood interior decorator would feel dislocated if you asked him to move to Orange County. In Georgia a barista from Athens would probably not fit in serving coffee in Americus.

It is a common complaint that every place is starting to look the same. But in the information age, the late writer James Chapin once told me, every place becomes more like itself. People are less often tied down to factories and mills, and they can search for places to live on the basis of cultural affinity. Once they find a town in which people share their values, they flock there, and reinforce whatever was distinctive about the town in the first place. Once Boulder, Colorado, became known as congenial to politically progressive mountain bikers, half the politically progressive mountain bikers in the country (it seems) moved there; they made the place so culturally pure that it has become practically a parody of itself.

But people love it. Make no mistake—we are increasing our happiness by segmenting off so rigorously. We are finding places where we are comfortable and where we feel we can flourish. But the choices we make toward that end lead to the very opposite of diversity. The United States might be a diverse nation when considered as a whole, but block by block and institution by institution it is a relatively homogeneous nation.

When we use the word "diversity" today we usually mean racial integration. But even here our good intentions seem to have run into the brick wall of human nature. Over the past generation reformers have tried heroically, and in many cases successfully, to end housing discrimination. But recent patterns aren't encouraging: according to an analysis of the 2000 census data, the 1990s saw only a slight increase in the racial integration of neighborhoods in the United States. The number of middle-class and upper-middle-class African-American families is rising, but for whatever reasons—racism, psychological comfort—these families tend to congregate in predominantly black neighborhoods.

In fact, evidence suggests that some neighborhoods become more segregated over time. New suburbs in Arizona and Nevada, for example, start out reasonably well integrated. These neighborhoods don't yet have reputations, so people choose their houses for other, mostly economic reasons. But as neighborhoods age, they develop personalities (that's where the Asians live, and that's where the Hispanics live), and segmentation occurs. It could be that in a few years the new suburbs in the Southwest will be nearly as segregated as the established ones in the Northeast and the Midwest.

Even though race and ethnicity run deep in American society, we should in theory be able to find areas that are at least culturally diverse. But here, too, people show few signs of being truly interested in building diverse communities. If you run a retail company and you're thinking of opening new stores, you can choose among dozens of consulting firms that are quite effective at locating your potential customers. They can do this because people with similar tastes and preferences tend to congregate by ZIP code.

The most famous of these precision marketing firms is Claritas, which breaks down the U.S. population into sixty-two psycho-demographic clusters, based on such factors as how much money people make, what they like to read and watch, and what products they have bought in the past. For example, the "suburban sprawl" cluster is composed of young families making about $41,000 a year and living in fast-growing places such as Burnsville, Minnesota, and Bensalem, Pennsylvania. These people are almost twice as likely as other Americans to have three-way calling. They are two and a half times as likely to buy Light n' Lively Kid Yogurt. Members of the "towns & gowns" cluster are recent college graduates in places such as Berkeley, California, and Gainesville, Florida. They are big consumers of DoveBars and Saturday Night Live. They tend to drive small foreign cars and to read Rolling Stone and Scientific American.

Looking through the market research, one can sometimes be amazed by how efficiently people cluster—and by how predictable we all are. If you wanted to sell imported wine, obviously you would have to find places where rich people live. But did you know that the sixteen counties with the greatest proportion of imported-wine drinkers are all in the same three metropolitan areas (New York, San Francisco, and Washington, D.C.)? If you tried to open a motor-home dealership in Montgomery County, Pennsylvania, you'd probably go broke, because people in this ring of the Philadelphia suburbs think RVs are kind of uncool. But if you traveled just a short way north, to Monroe County, Pennsylvania, you would find yourself in the fifth motor-home-friendliest county in America.

Geography is not the only way we find ourselves divided from people unlike us. Some of us watch Fox News, while others listen to NPR. Some like David Letterman, and others—typically in less urban neighborhoods—like Jay Leno. Some go to charismatic churches; some go to mainstream churches. Americans tend more and more often to marry people with education levels similar to their own, and to befriend people with backgrounds similar to their own.

My favorite illustration of this latter pattern comes from the first, noncontroversial chapter of The Bell Curve. Think of your twelve closest friends, Richard J. Herrnstein and Charles Murray write. If you had chosen them randomly from the American population, the odds that half of your twelve closest friends would be college graduates would be six in a thousand. The odds that half of the twelve would have advanced degrees would be less than one in a million. Have any of your twelve closest friends graduated from Harvard, Stanford, Yale, Princeton, Caltech, MIT, Duke, Dartmouth, Cornell, Columbia, Chicago, or Brown? If you chose your friends randomly from the American population, the odds against your having four or more friends from those schools would be more than a billion to one.

Many of us live in absurdly unlikely groupings, because we have organized our lives that way.

It's striking that the institutions that talk the most about diversity often practice it the least. For example, no group of people sings the diversity anthem more frequently and fervently than administrators at just such elite universities. But elite universities are amazingly undiverse in their values, politics, and mores. Professors in particular are drawn from a rather narrow segment of the population. If faculties reflected the general population, 32 percent of professors would be registered Democrats and 31 percent would be registered Republicans. Forty percent would be evangelical Christians. But a recent study of several universities by the conservative Center for the Study of Popular Culture and the American Enterprise Institute found that roughly 90 percent of those professors in the arts and sciences who had registered with a political party had registered Democratic. Fifty-seven professors at Brown were found on the voter-registration rolls. Of those, fifty-four were Democrats. Of the forty-two professors in the English, history, sociology, and political-science departments, all were Democrats. The results at Harvard, Penn State, Maryland, and the University of California at Santa Barbara were similar to the results at Brown.

What we are looking at here is human nature. People want to be around others who are roughly like themselves. That's called community. It probably would be psychologically difficult for most Brown professors to share an office with someone who was pro-life, a member of the National Rifle Association, or an evangelical Christian. It's likely that hiring committees would subtly—even unconsciously—screen out any such people they encountered. Republicans and evangelical Christians have sensed that they are not welcome at places like Brown, so they don't even consider working there. In fact, any registered Republican who contemplates a career in academia these days is both a hero and a fool. So, in a semi-self-selective pattern, brainy people with generally liberal social mores flow to academia, and brainy people with generally conservative mores flow elsewhere.

The dream of diversity is like the dream of equality. Both are based on ideals we celebrate even as we undermine them daily. (How many times have you seen someone renounce a high-paying job or pull his child from an elite college on the grounds that these things are bad for equality?) On the one hand, the situation is appalling. It is appalling that Americans know so little about one another. It is appalling that many of us are so narrow-minded that we can't tolerate a few people with ideas significantly different from our own. It's appalling that evangelical Christians are practically absent from entire professions, such as academia, the media, and filmmaking. It's appalling that people should be content to cut themselves off from everyone unlike themselves.

The segmentation of society means that often we don't even have arguments across the political divide. Within their little validating communities, liberals and conservatives circulate half-truths about the supposed awfulness of the other side. These distortions are believed because it feels good to believe them.

On the other hand, there are limits to how diverse any community can or should be. I've come to think that it is not useful to try to hammer diversity into every neighborhood and institution in the United States. Sure, Augusta National should probably admit women, and university sociology departments should probably hire a conservative or two. It would be nice if all neighborhoods had a good mixture of ethnicities. But human nature being what it is, most places and institutions are going to remain culturally homogeneous.

It's probably better to think about diverse lives, not diverse institutions. Human beings, if they are to live well, will have to move through a series of institutions and environments, which may be individually homogeneous but, taken together, will offer diverse experiences. It might also be a good idea to make national service a rite of passage for young people in this country: it would take them out of their narrow neighborhood segment and thrust them in with people unlike themselves. Finally, it's probably important for adults to get out of their own familiar circles. If you live in a coastal, socially liberal neighborhood, maybe you should take out a subscription to The Door, the evangelical humor magazine; or maybe you should visit Branson, Missouri. Maybe you should stop in at a megachurch. Sure, it would be superficial familiarity, but it beats the iron curtains that now separate the nation's various cultural zones.

Look around at your daily life. Are you really in touch with the broad diversity of American life? Do you care?

24 June, 2016


Congratulations to our friends 'across the pond'.  I firmly believe they made an excellent decision yesterday in choosing self-determination and freedom over EU super-government.  Although the short-term future remains uncertain, having the power to control your laws, trade agreements, immigration policies, and currency is the better path (yes, I know Great Britain previously maintained their currency and immigration policies, but their membership in the EU proved a heavy weight regarding these issues).

It seems to me the only way this goes badly is if the EU decides to be petulant and punitive in their treatment of their former member.  I believe that petty response (similar to a mob enforcer) only reinforces the wisdom of exiting such an organization.  

I hope the United States continues to support Great Britain as they transition to the next chapter in their national story.  We've always stood for freedom and self-determination, and we should welcome this development - after all, we showed them the way...


16 June, 2016

Who is our enemy?

June 15, 2016 In confronting terrorism, the U.S. needs to decide whether it is at war and who the enemy is.

reality check-headerbar

By George Friedman
The slaughter in Orlando, Florida on Sunday once again raises the question of what we should do about attacks like this. But before that, we must answer a more fundamental question: Was this a criminal act or an act of war? Answering that question is the key to determining the appropriate response.

If these are criminal acts, then the criminals must be punished for their actions. If these are acts of war, then the enemy forces must be found and destroyed, not based on what they might or might not have done, but in order to destroy the enemy before they can strike again.

Since 9/11, the United States government has failed to resolve this issue. Immediately after the attack, President George W. Bush committed to bringing those who planned the attack to justice, implying that this was a criminal act.

At the same time, he sent the U.S. military into Afghanistan to wage war on the Afghan government, its army and al-Qaida, which was operating under the government’s protection. That implied that this was war.

The rules of war and the rules of criminal justice are vastly different, as is their intent. Had President Franklin D. Roosevelt said in his speech after Pearl Harbor that he intended to bring everyone who planned the Pearl Harbor attack to justice, he would have completely missed the point. It was not the pilots or the staff officers who had committed a crime. It was the Empire of Japan, as Roosevelt put it, that had committed an act of war.

Bush further confused the issue by speaking of the Axis of Evil – Iraq, Iran and North Korea – saying that was in some sense responsible for 9/11. He also spoke of a Global War on Terror. Terror is a weapon of war. It is designed to terrorize the citizens of a country into either paralysis or overthrowing their government. The Germans bombed Britain for that reason in World War II. The allies bombed Germany for the same reason.

As a means of warfighting, terrorism is similar to tanks or aircraft carriers in that they are tools of war, rather than the enemy itself. Imagine if Roosevelt had declared a global war on aircraft carriers, since carrier-based planes had attacked Pearl Harbor.

Bush never clarified whether we were at war, and completely confused the issue of who we were at war with. He wisely did not want to declare war on the Islamic world, because it contains 1.7 billion people and the likelihood of defeating that many with a standing army of about 500,000 troops is remote.

In addition, as he knew, only a tiny fraction of the 1.7 billion people were interested in and capable of carrying out terrorist attacks. So, he focused on al-Qaida, and then further complicated the issue by invading Iraq, whose secular president, Saddam Hussein, was obsessed at the time with survival, and was unlikely to form an alliance with the jihadists.

The conceptual confusion was further compounded by President Barack Obama. He not only pointed out the obvious, which is that the United States is not hostile to all Muslims, but also tried to take the position that the terrorists’ proclaimed belief in Islam was incidental to their actions.

Others who take this position have also pointed out that guns in the United States kill more people than terrorism.

Obama’s view that Islam was incidental to terrorism was in fact a repetition of Bush’s point on the Axis of Evil. The target included all terrorists, Muslim or not. As for the argument on guns verses terrorism, it is both true and vague in its intent. It seemed to be saying that terrorism is more tolerable because of the prevalence of gun violence. But it is not clear what change of action is being recommended.

It is now almost 15 years since 9/11 and we still have not answered the core questions: Are we at war or fighting criminals? And if we are at war, who with exactly? To distinguish between crime and war, you have to look at intent, not means. The means may be the same but the goal is different. Criminals pursue money or are unbalanced and pursue fantasies. Terrorists are pursuing political ends, and therefore, their attacks are consistent with the definition of war. War is a continuation of politics by different means. War is intimately bound up with politics. Crime is not. There are always gray areas, but this definition works.

What are the political ends of Islamist terrorists? Since the rise of al-Qaida, there has been a clear and consistent goal: to overthrow “hypocritical” Muslim states and replace them with jihadist regimes that would create a united global Muslim state called the caliphate.

To achieve this end, the jihadists need to do two things. The first is to demonstrate to the Muslim masses that they have been betrayed by their own governments, and that they have the power to seize control of their own destinies.

The second goal is to drive the United States, Europe and other non-Muslim powers out of the Islamic world. Terrorism is intended to drain the enemy of its will to continue and force withdrawal. This is the same goal of the mass bombings of World War II.

The two goals mesh, because terrorism does not require major organization or resources. It simultaneously strikes at the enemy, and empowers all its supporters who wish to be empowered.

Given this end, there is no question that terrorism is an act of war and not a crime. The problem is defining the enemy. We know that all Muslims are not jihadists. We also know that all jihadists are Muslims.

In this war, the jihadists are hard to identify for the same reasons that they are in utter violation of the Geneva Convention. The Geneva Convention acknowledges the right of partisans – guerrillas – to be treated as soldiers. However, they must meet two criteria. First, they must carry their weapons openly. Second, they must wear clothing that identifies them as warriors.

The jihadists do neither of these things and, therefore, have no rights under the Geneva Convention – another point that has been utterly confused in Western debates. But giving up rights under the Geneva Convention does not give jihadists claim to the criminal justice system. In World War II, when soldiers were caught infiltrating out of uniform, the normal punishment on all sides was execution after a casual court martial. There was no concept that violators of the Geneva Convention had legal protections beyond military justice.

At the same time, the advantage of being out of uniform and hiding weapons was understood on all sides. The jihadists have a tremendous advantage in this. Since their primary goal is maximum casualties, explosives and rifles are the weapons of choice.

Since the goal of a war is to render the enemy incapable of waging war, that goal can be thwarted by covert operations. This strategy puts the defender in the position of waiting for the next attack and having to defend an impossibly large set of targets, or identify enemy operatives who have blended into the general population or are drawn from it. The best way to do this is to track known jihadist operatives and see who they make contact with.

Therefore, the Islamic State avoids contact with potential operatives. Instead, it encourages those with little or no direct contact with IS to design and execute terror attacks that maximize casualties and thereby shake the target country. Like all ideological movements, it is possible to both know the goal of the organization and participate in its realization in some way without having contact with the main organization.

This strategy was learned from the defeats of the Palestinian groups in the 1970s and 1980s. Modeled after Soviet-style organizations, these groups were self-enclosed and highly secure. The problem was that even the most secure organization could be penetrated.

What al-Qaida learned, and IS grasps even better, is that the cost of carrying out terrorism is organization. They must accept a degree of chaos in return for operations that are frequently unguided by the center. However, the lone wolves are alone only in the sense that they lack personal contact. They are deeply in contact with the ideology.

This brings us back to the challenge of defining who the West is at war with. The obvious answer is that the West is at war with the jihadist strand of Islam. The problem is that this strand is not only covert, but also embedded in the Muslim community as a whole.

This again proves why the Geneva Convention does not protect jihadists. In the Franco-Prussian War, French snipers hid in crowds to shoot at Germans. The Germans fired back hitting civilians. The framers of the Geneva Convention held the French, not the Germans, responsible for the carnage. Using civilians as cover for operations is a violation of the Geneva Convention.

It is nice to have the law on your side, but it doesn’t solve the problem of how to wage this war. The enemy is indistinguishable from friends. You can only identify the jihadists by intruding deeply into the community, and beyond. You can intercept phone calls, but hardly any will provide clues and, given the volume of calls, they cannot all be intercepted. You can also plant operatives in mosques. There are many actions that can be taken – but all are obnoxious to American values.

It should be remembered that, in the Civil War, Abraham Lincoln suspended the right to habeas corpus. During World War II, Roosevelt imposed intensive censorship and spied on Congress. But all knew that at some point these wars would end. Fighting the jihadist war will likely take a long time, and suspending liberties for long would change the character of the Republic. It might also generate hostility towards the government, a goal of the jihadists.

This is merely one of the challenges that must be debated. But it cannot be debated until we face some truths. This is a war and jihadists are the enemy. Not all Muslims are jihadists, but all jihadists are Muslims. There are other terrorist groups and other causes of death, but none have as extravagant plans for doing us harm as the jihadists.

Giving up liberties may be too high a price, but we should be honest in admitting the price we will pay. In addition, some tactics may seem plausible, but will not solve the problem in the end. Stopping Muslims from coming to the country, for example, may seem reasonable to some, but a child could get around that barrier. We must be honest that the war, which has raged for 15 years, will go on for a long time to come. We can bring our troops home. But jihadists may follow them. All of these things must be honestly considered. But we like to lie to ourselves, and that’s the real enemy.

31 May, 2016

Socialism for the Uninformed

By Thomas Sowell
May 31, 2016

Socialism sounds great. It has always sounded great. And it will probably always continue to sound great. It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster.

While throngs of young people are cheering loudly for avowed socialist Bernie Sanders, socialism has turned oil-rich Venezuela into a place where there are shortages of everything from toilet paper to beer, where electricity keeps shutting down, and where there are long lines of people hoping to get food, people complaining that they cannot feed their families.

With national income going down, and prices going up under triple-digit inflation in Venezuela, these complaints are by no means frivolous. But it is doubtful if the young people cheering for Bernie Sanders have even heard of such things, whether in Venezuela or in other countries around the world that have turned their economies over to politicians and bureaucrats to run.

The anti-capitalist policies in Venezuela have worked so well that the number of companies in Venezuela is now a fraction of what it once was. That should certainly reduce capitalist "exploitation," shouldn't it?

But people who attribute income inequality to capitalists exploiting workers, as Karl Marx claimed, never seem to get around to testing that belief against facts -- such as the fact that none of the Marxist regimes around the world has ever had as high a standard of living for working people as there is in many capitalist countries.
Facts are seldom allowed to contaminate the beautiful vision of the left. What matters to the true believers are the ringing slogans, endlessly repeated.

When Senator Sanders cries, "The system is rigged!" no one asks, "Just what specifically does that mean?" or "What facts do you have to back that up?"

In 2015, the 400 richest people in the world had net losses of $19 billion. If they had rigged the system, surely they could have rigged it better than that.

But the very idea of subjecting their pet notions to the test of hard facts will probably not even occur to those who are cheering for socialism and for other bright ideas of the political left.

How many of the people who are demanding an increase in the minimum wage have ever bothered to check what actually happens when higher minimum wages are imposed? More often they just assume what is assumed by like-minded peers -- sometimes known as "everybody," with their assumptions being what "everybody knows."

Back in 1948, when inflation had rendered meaningless the minimum wage established a decade earlier, the unemployment rate among 16-17-year-old black males was under 10 percent. But after the minimum wage was raised repeatedly to keep up with inflation, the unemployment rate for black males that age was never under 30 percent for more than 20 consecutive years, from 1971 through 1994. In many of those years, the unemployment rate for black youngsters that age exceeded 40 percent and, for a couple of years, it exceeded 50 percent.

The damage is even greater than these statistics might suggest. Most low-wage jobs are entry-level jobs that young people move up out of, after acquiring work experience and a track record that makes them eligible for better jobs. But you can't move up the ladder if you don't get on the ladder.

The great promise of socialism is something for nothing. It is one of the signs of today's dumbed-down education that so many college students seem to think that the cost of their education should -- and will -- be paid by raising taxes on "the rich."

Here again, just a little check of the facts would reveal that higher tax rates on upper-income earners do not automatically translate into more tax revenue coming in to the government. Often high tax rates have led to less revenue than lower tax rates.

In a globalized economy, high tax rates may just lead investors to invest in other countries with lower tax rates. That means that jobs created by those investments will be overseas.

None of this is rocket science. But you do have to stop and think -- and that is what too many of our schools and colleges are failing to teach their students to do.

27 May, 2016

Gawker + Thiel + Free Speech

The Liberal Case Against Peter Thiel Is The Worst Kind Of Hypocrisy
Hysteria over the Gawker suit is unconvincing— especially when you consider who’s leading the charge.
May 26, 2016 By David Harsanyi

We recently discovered that Peter Thiel, libertarian (?) billionaire co-founder of PayPal and early investor in Facebook, has been bankrolling lawsuits against the gossip site Gawker.

Now, as someone who considers himself a near-absolutist on free speech, I’m open to hearing arguments for why we need tort reform in these sorts of cases or why Hulk Hogan’s suit undermines free expression. But so far, the media’s hysteria about Thiel’s third-party legal funding has been unconvincing — especially when we consider who’s making the arguments.

And after wading through the thousands of angst-ridden words, I noticed that the case mostly boils down to two objections: Thiel’s motivations and Thiel’s money. And when I say Thiel, I mean Thiel. There is little anxiety over third-party funding when we’re talking about the giant apparatus the Left uses to implement their own will via the courts. Even more hypocritical is the fact that many of the same people so distressed about the future of sex tapes regularly advocate for policies that would allow the state to inhibit political speech.

Ezra Klein, for instance, writes that what’s “endangering Gawker is Thiel’s endless resources, and his apparently limitless appetite for revenge. Those tools can be used by anyone with enough money, against any media target they choose, for any slight they perceive.”

Josh Marshall says it’s a “Huge, Huge Deal,” and writes, “We don’t have to go any further than Donald Trump to know that the incredibly rich often use frivolous litigation to intimidate critics and bludgeon enemies.”

Thiel is “reinventing the concept of philanthropy so as to include weapons-grade attacks on America’s free press,” writes Felix Salmon, who goes onto say that Thiel’s success has essentially given other billionaires a blueprint on how to put critics out of business. Slate says Thiel is the bully here.

Which would all be very upsetting if true.

There’s a question that should not be lost in this debate: is it an invasion of privacy to make public a tape—not a news story about a sexual indiscretion or a snapped picture of a sexual indiscretion in some public place, but a movie of a person engaged in sex in private—without the consent of the person in it? In other words, was this lawsuit really “frivolous?” Not according to a judge. Not according to the jury that awarded Hogan more than $100 million. And not according to a circuit court judge that upheld that verdict.

There’s no doubt the judicial system has its share of ridiculous decisions, frivolous lawsuits and hyper-litigious troublemakers. So what precedent has Thiel really set? Well, we’ve probably seen the end of sites posting private sex tapes without permission. If you’re upset about the amount Gawker is on the hook for, let’s talk about capping awards. But the contention that Thiel is abusing the system because of a “limitless appetite” for revenge would be a lot stronger if he hadn’t actually won the case.

Now, whether Thiel was compelled to engage in this crusade because he was “slighted” by Gawker is immaterial. Some rich people are motivated to act because they are slighted, others because of ideology, or empathy or hate, or because there’s a media outlet that believes it’s okay to run sex tapes of people as long as they’re not under the age of four. So what?

Moreover, if Thiel’s motivation were a cause liberal pundits felt some moral or ideological affinity towards, they would be cheering him on. Vox asserts that Thiel “sees his lawsuit as a public-spirited attempt to enforce norms of decency and respect for personal privacy.” Or, in other words, he uses the judicial system the same way liberals have for decades when trying to enforce their own norms—including ones on abortion rights, gay marriage, and basically everything else they value.

Actually, every contemporary major lawsuit of any political consequence has probably been funded in some way by a third party. If Thiel is a problem, so is the pro bono legal work of wealthy lawyers who donate their time and resources to causes that move them. So is contingent litigation. So are class-action lawsuits. So is every advocacy legal group. Start with the ACLU, which is backed by hundreds of One Percenters and works to enforce its own norms of “decency and respect” when it comes boys’ and girls’ bathrooms and leads crusades to do away with the Free Exercise Clause.

By the way, Nick Denton is also a One Percenter. So are the owners of the New York Times and every other major media outlet you can think of. These One Percenters can just as easily destroy lives and abuse their powerful position and hire teams of lawyers. Sometimes the only way to fight back is to collectively fund an effort or find a third-party benefactor.

If press outlets feel that the sex tape case is worthy of a First Amendment fight, they could easily match Thiel’s $10 million investment. Otherwise, what do these critics propose? Should we pass a law capping the amount of funding people with the last names “Thiel” and “Koch” can provide for lawsuits? Ban billionaires from participating in the legal system?

But the most infuriating hypocrisy of the entire Thiel kerfuffle is that many of those wringing their hands have no problem with the overall deteriorating attitude regarding free expression on the Left. Some, in fact, actively argue for inhibiting free speech. I’m not only talking about the rampant illiberalism we see at institutions of higher learning or the abuse of government officials who are attempting to punish Americans who are skeptical of liberal doctrine. Some of them would be perfectly content handing over far broader and more consequential powers of censorship to the state, allowing government to literally ban movies and books with political messages. That includes the institutional position at almost every liberal publication lamenting the actions of Peter Thiel.

24 May, 2016

Ben Stein: Words of Wisdom

Ben Stein’s Diary
Playing the Teacher in Front of a Classroom
Ben Stein


May 17, 2016

The best part about it is that it’s not acting.

In my life, aside from my very private moments with my wife and my dogs, the happiest moments of my existence have been in front of a classroom.

When I contemplate my roughly 71 years on this planet, I had many great times watching cartoons with my son and my wife and getting awards and walking in the redwoods of Santa Cruz, looking out my window in Sandpoint at the stupefying blue, red, yellow, and grey daybreak. Zooming along the lake in my Cobalt, with the Stars and Stripes fluttering on the rear of the boat and my wifey’s perfect profile to my left. I can recall happy times with my Pop at the White House Mess, sharing our secrets while John Dean plotted his next move nearby. I can have a great time any moment I step into my pool and start swimming the world’s laziest backstroke while the sun beats through the palms and jets ply the air overhead with their silvery magic. I remember my mother offering me grapes as I slept.

When I awaken and look at my wife and the dogs, I cannot believe how blessed I am. Just to look at the American flag over my bed and the map of the USA in my living room is to feel the red, white, and blue glory of living in the most spectacular edifice of all eternity.

But it has been in front of a classroom that I have had my greatest joy.

In 1970, in Anti-Trust Law at Yale, I commandeered the class and made our bully of a teacher (but a super smart guy) leave the room and quit teaching: all because I threatened to take my clothes off and recite the names of the Vietnam War dead if he didn’t stop his game playing.

In 1973, I was an adjunct teacher of film at American University at Ward Circle in my home town of DC. It was my third semester teaching there in the evenings after harrowing days practicing trial law. I had the most popular class ever in the history of AU up until then: 360 students for the superficially easiest elective in the world. It was called “Film and Revolution!”

The first day of class, when I entered the room and strode up to the podium, at about 150 pounds, long hair, mustache, menacing potent ’62 Red Corvette in the parking lot, Buick repair jacket on, the whole room erupted in sustained, standing cheering.

They knew I was their pal and that we would have a great time. And the class was not at all easy at in fact. The kids had to use Socratic method techniques to dissect what the secret motives of the writers were in terms of wishes for social change.

(This led to my book: The View From Sunset Boulevard — about the political attitudes of the TV writing aristocracy and how those views gave us the distinctly red-tinged messages of prime time. But that was later. In ’72 and ’73 I was talking about movies.)

Your humble servant had a rush of excitement every day I taught that class. The kids loved me and I loved them.

Soon, I went on to teach at UC, Santa Cruz. It was fabulous, too, although not like AU. But the views from my classroom were incredible. Then to teach at Pepperdine, also great stuff, an even better view, but nothing like my magical mystery tour at the Ward Circle Building at AU.

Then, on about November 16, 1985, came the day that altered my life forever: Playing a teacher in a movie called Ferris Bueller’s Day Off. I did a long speech about the economy off the cuff and the young extras playing high school students applauded and whistled when I was done.

Matthew Broderick asked me if I did theater on Broadway. Michael Chinich and John Hughes told me I would be a star.

Now, I travel about the nation speaking about the economy, the demise of certain ethnic and demographic groups, politics, and investing. It’s not AU in 1973, but it’s still paradise.

I love to speak and by now, with 71 years over my belt (not under my belt… I am too fat for that), I have a bit to say, and if I were asked to speak at a college (as I actually often am), this is what I would say to graduates:

WE ALL WANT TO BE ABLE TO LOOK BACK at our lives when we are my age and say we have been successful. But what is successful? It certainly has something to do with money. Shortages of money are simply horrifying. Fear of financial insecurity is awful. So before anything else, success requires at least a modicum of financial security, obtained in a respectable way.

But once we are past that, success requires that we spend our lives doing what we like to do: in a free society, one of the best possibilities is to do not what your parents expect you to do, not what the school guidance counselor tells you to do, but what you enjoy doing.

My old pal and inspiration, Warren E. Buffett, says (if I may boil it down) that he has become the richest man in the world or one of the richest not because he chose a highly paid field that he hated, but because he happened to love a field that paid astoundingly well: allocating capital.

When I worked on Wall Street, I hated every moment of it (although I love finance people once they are away from New York). Buffett “tap dances to work,” as he likes to say. That’s the way to make a life.

My dear young friend, L., just graduated from a prestige university. She is going to work at improving the lives of poor people in our nation’s capital. Some people in her life told her she was wasting her education working in that vineyard. I disagree. I think she’ll do great things there and she’ll be doing what she loves. That’s what makes you succeed — making your work your play or maybe making your play your work.

That last comes from one of the smartest men I have ever met, the mega producer, Norman Lear. (I know I have not quoted it exactly right.) He made what he enjoyed doing — weaving tales of meaning and humor — into a super remunerative career.

It’s really a matter of definition. As I see it, we all have only one life to live. If we spend it doing work we hate, we have made a serious mistake. If we spend it doing work we barely tolerate, we have made a mistake.

What good does it do to have money, even a meaningful amount of money, if you have spent your one and only life doing work that does not thrill you?

So, make a living — but also make a life.

I also respectfully advise that young people have a spiritual basis for their lives — and that such spiritual basis involve doing good for others. As I have grown older I see that a selfish life spent without having a high priority for helping others is a waste of life. The knowledge that you are sharing your humanity and your limited span on this planet with those in need gives you self-esteem in even the darkest hours.

This goes hand in hand with my own certain conviction that there is a Higher Power which controls the universe. It’s not evolution and it’s not chance. It’s God and when He does some things and lets other horrible events happen, when there are death camps and child rapes and gulags and trench warfare and killing fields, we have to wonder what kind of God He is. But I am certain that the laws of physics and motion and gravity did not happen by themselves, that Someone designed them. I don’t think that someone was Marx or a pit boss in some cosmic gambling house.

Life is a heavy burden. Ask and then allow God to share it.

Have gratitude on your plate night and day and sup heartily. We in America, especially the young, have lives that even the wealthiest people two centuries ago could not imagine. We have air conditioning and modern medicine and automobiles and jet travel. We have free worldwide instantaneous communication.

But mostly, we have freedom under law. We have equality before the law. We have the liberty to do what we want with our lives day by day and have that liberty protected — not repressed — by the government.

We have a free capitalist system that allows everyone who saves to become a part owner in the mighty American capitalist engine, even the super mighty worldwide industrial machine. “Every man a King,” said Huey Long of Louisiana. That was a joke, but “Every man a capitalist” is real and true and has saved many a life.

Investing early and often, in a diversified basket of corporate ownership, making yourselves partners with the likes of Warren Buffett and Mark Zuckerberg and harnessing the genius of the system of capitalism — that’s a miraculous freedom all too often derided by the young. But those who pay attention to what is real instead of to fantasies of paranoia will reap immense rewards as the years go by. The freedom to invest is a boon to mankind.

But gratitude in general is a gift for the man or woman who is grateful as well as to the person to whom he is grateful. Make use of that truly free and indispensable gift.

There is much more to say: Be thrifty. Don’t get high as a matter of course. Don’t be afraid to take on powerful opponents.

Respect innocent life, no matter how politically unpopular it is. The power elites and the media will hate you for it, but respect for the most innocent life among us is to be worn as a badge of honor.

Life in America for most of us is great. Let’s spend time enjoying ourselves making it even better for others whose lives are not great. Let’s do it in freedom and gratitude, and let’s do it now. Class dismissed.