Category: national politics & policies

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ideological culture national politics & policies

New-Fashioned Racism

“A deeply divided Supreme Court squared off Wednesday over the future of affirmative action in college admissions,” reports the Washington Post, covering the admissions policy of the University of Texas. The arguments for and against race-based admissions preferences were mostly old hat, but got weird when Justice Alito noted a policy of preferring the children of minority professionals over more-qualified, but poorer, non-minorities:

“I thought the whole purpose of affirmative action was to help the disadvantaged,” Alito said. He asked why a minority child of the “1 percent” should get a “leg up against, let’s say, an Asian or a white applicant whose parents are absolutely average in terms of education and income?”

State universities are allegedly all about equality of opportunity. Favoring the under-performing children of wealthy minority folks doesn’t exactly qualify. As a friend of mine put it, “If the elites have to choose between rubbing elbows with the poor or hanging out with the under-performing children of upper middle class professionals, there’s no contest: administrators much prefer racial diversity over a diversity of economic class and ideas.”

What we have here is a new classism using “anti-racism” as a wedge.

But it is itself racism. It’s just not “old-fashioned racism.”

Barack Obama, way back in 1994 — in the earliest recording of our current president arguing policy — used that phrase (“good old-fashioned racism”) to attack Charles Murray and defend reverse discrimination and massive increases in welfare programs. So, in keeping with his terminology, perhaps we should call today’s race-based “compensatory” policies “new-fashioned racism.”

After all, these policies favor some over others not based on their relevant qualifications — or on the “content of their character” — but, instead, based on their race.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture national politics & policies

China Syndrome, 2012

The two major presidential candidates, incumbent Obama and challenger Romney, must spend their final weeks of the campaign appealing to

  1. Members of their respective parties disappointed enough to stay home on election day — or vote the dreaded “Third Party” ticket;
  2. Independent voters apt to find something distasteful about both candidates;
  3. The apathetic and the uninformed.

How to appeal to all three groups simultaneously? Well, go for the old standby: fear and hatred of foreigners.

This year, it’s the Chinese.

Romney started the China-bashing by calling our Chinese trading partners “cheaters.” Apparently he is much vexed about how the Chinese don’t respect established intellectual property rights, “stealing” our technology, “everything from computers to fighter jets.” Of course, this mainly happens after “we” set up manufacturing plants for that technology there. He charged that President Obama has not deigned to “stand up to China.”

Earlier, he had accused China of manipulating its money in its favor. He seems to have dropped that, perhaps out of embarrassment — our own Fed’s monetary manipulations, after all, dwarf China’s.

The Obama campaign responded by avoiding the intellectual property issue just as Romney now avoids the monetary one, calling Romney himself a “cheater.” You see, in his Bain Capital days, Romney invested in firms that relocated jobs to “low wage countries like China.” Romney, we are told, has “never stood up to China.”

By which is meant: Romney engaged in globalism and opposed protectionism.

Is Mr. Obama really suggesting that prosperity will come if we shrink from global competition and enact barriers to international trade in goods and services?

The biggest problem the U.S. economy faces isn’t Beijing; it’s Washington.

This is Common Sense. I’m Paul Jacob.

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national politics & policies tax policy too much government

Avoid the Big Gov Trap

We do not face just one problem, but our many problems tend to come down to one thing: trying to do too much through government.

Last weekend, at Townhall, I noted that the most wildly popular economic policy doctrine of the last hundred years, Keynesianism, has not — its proponents say — been properly given a chance during the two biggest financial contractions of our time, the Great Depression and the recent mortgage-backed securities implosion. In both cases, more money was needed for proper “stimulus.”

Ironic, perhaps, since Keynesianism has been used as an excuse to run deficits and increase debt for scores of years.

Yes, even a doctrine designed to play into the hands of politicians gets abused by politicians.

The lesson: Excuses to grow government are not revolutionary insights, they’re traps.

Yesterday I talked about how the “Laffer Curve” point where raising the tax rate actually reduces revenue is lower for capital gains than for general income. But one consequence of a revenue-maximizing capital gains rate is that there would then be rich investors who wind up paying a smaller percentage of their incomes in taxes than do common laborers.

Tax fairness is an issue that should not be ceded to those caught in the clichés of the age. Think of tax fairness, instead, as a rationale for a limit. Not as an excuse to raise tax rates punitively, hatefully, foolishly (like the current president wants).

Bring all tax rates down to the level of the tax with the lowest revenue-maximizing rate. Don’t raise capital gains taxes, lower the income tax. 

Taxes would then be fair. And government would have to be reduced to accommodate the fairness, and thus more limited.

Less of a trap.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies political challengers

Polled American!

More people view Mitt Romney unfavorably (49 percent) than view Barack Obama unfavorably (45 percent), according to the most recent Reason-Rupe Poll. This, despite Romney being the challenger, while President Obama must live down his sorry record.

By this measure, and others in the poll, Obama’s re-election seems ever more likely. And if you think that’s depressing, wait till you read about the general views of taxing the rich more. The “soak the rich” mentality remains quite strong. But some of this “the rich don’t pay their fair share” notion is based on misinformation. Get a load of this:

Last year, the government collected about $1.8 trillion dollars in income tax revenue. If you were to estimate, about what PERCENTAGE of this total tax revenue do you think the top 5 percent of households probably contributed? Would you say…

<1% . . . . . . . . . . . . . . . . . . .  3%

1% to less than 20% . . . . . . . 29%

20% to less than 40% . . . . . . 19%

40% to less than 60% . . . . . . 15%

60% to less than 80% . . . . . . 11%

80% or more . . . . . . . . . . . . . 8%

Don’t Know/Refused . . . . . . . 16%

The truth is that America’s Top 5 percenters pay more than 60 percent of income taxes collected. The vast majority of those polled (66 percent) thought the Top 5 should pay less than they currently do.

I’m not going out on a limb, here, to infer a lesson: Were Americans to learn a few more truths about their government, about taxes, and (hey, why not?) real life, they might change their minds on a few crucial political notions.

Education — and by this I don’t mean schooling — is obviously important to political betterment.

This is Common Sense. I’m Paul Jacob.

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national politics & policies

It’s So Simple, If You Forget

“We cannot be complacent,” Federal Reserve Bank President Charles Evans said yesterday. He was most distressed by any lingering notion that the economy would remain undamaged were “no action” taken.

He wants more money flushed into the system. “If we continue to take only modest, cautious, safe policy actions,” he argued, “we risk suffering a lost decade similar to that which Japan experienced in the 1990s.”

Ah, and I was going to use the long Japanese recession as an example of what can happen when too much monetary and bailout hanky-panky is allowed.

Evans apparently thinks that mid-September’s unleashing of quantitative easing — or QE, the currently fashionable banker’s version of crony capitalism — with the Fed promising monthly $40 billion purchases of mortgage-backed securities, is tantamount to “no action” and “doing nothing.”

Or else he’s worried that Bernanke’s critics might have some sway.

Relying on the old (by-the-textbook but long-discredited) Phillips Curve story of inflationary money leading inexorably to increased employment, cheap money maven Evans told reporters that “the economy” would “need 200,000 to 250,000 job gains per month” before the Fed could dare rethink its current policy.

He’s apparently forgotten that stagflation is possible. I don’t know why: He’s just a few years older than me, and I remember when the Phillips Curve’s simple trade-off between inflationary monetary policy and unemployment rates hit the trash bin of history, as both inflation and unemployment soared in the 1970s.

When our leaders forget history, are we doomed to repeat it?

Stagflation may be the best we can hope for from current QE.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy

Tax Reductions Ahead?

As the president yammers on about making the rich “pay their fair share,” behind the scenes his administration has suggested reducing corporate tax rates by seven points. Meanwhile, Obama’s main challenger, Mitt Romney, promised a full ten point rate cut, if elected.

Why? By international standards, American corporate taxes are obviously way too high.

The U.S. effective tax rate on new corporate investment sits at 35.6 percent today, which, write Duanjie Chen and Jack Mintz for the Cato Institute, “is almost twice the average rate for the 90 countries” the duo studied, in “Corporate Tax Competitiveness Rankings for 2012.”

The U.S. has higher corporate tax rates than France.

And India, Colombia, Brazil, Japan, Venezuela, Korea, Russia, Costa Rica, you name it. This is not something we want to be No. 1 at.

Well, at least Argentina, Chad and Uzbekistan tax at even higher rates.

There’s no consolation in others’ folly, though.

The authors look northward, to Canada, which, since 2000, made some huge adjustments downward on tax rates affecting businesses: 15 percent cuts in federal statutory tax rates, eliminating most capital taxes, removing sales taxes on capital goods, and scaling back on special preferences that tend to make taxation such a mess there as well as here. And all the while revenues from these taxes have remained stable per GDP.

Could we get lower corporate taxes, here? Well, this is not an area where those on the left can enviously eye their beloved European social democracies to make their usual, tedious case for higher taxes. Norway’s rates are ten percent lower than ours, and Sweden’s, Denmark’s and Finland’s are lower yet.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies political challengers too much government

Bite the Hand

I’m not sure there’s much percentage in talking about percentages.

Divvying folks into groups, and then relying on people to “stay” within their group — behaving according to one’s specifications — seems . . . kind of creepy.

Last year’s “Occupy” movement, with its relentless pitching of the “99 percent,” demonstrated that creepy/icky factor pretty well.

But Mitt Romney had to horn in on the action. “There are 47 percent of the people who will vote for the president no matter what,” he said. These wards of the state, he went on to say, believe that

  • they are victims
  • government has a responsibility to care for them
  • they are entitled to health care, to food, to housing, to you-name-it

Furthermore, “these are people who pay no income tax,” Romney stated. “I’ll never convince them they should take personal responsibility and care for their lives.”

Well, not all folks who are somehow “dependent on government” — a group ranging from Social Security retirees and the non-working poor to federal employees and agribusinesses and Solyndras feeding at the federal trough — necessarily want to increase their own ranks. Not a few are savvy enough to notice that the system that feeds them would, if larded up with more recipients, be made less capable of feeding them.

As for the logic of “not biting the hand that feeds you,” the advice of the late Thomas Szasz is pertinent: “maybe you should, if it prevents you from feeding yourself.”

After all, many of the people who may qualify, technically, as being “dependent on government” would rather not be. And might like the option of being less encumbered by government “help.”

Mitt, I wouldn’t write them off yet.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

The Bernanke Stretch

Last week, the Federal Reserve announced it was going ahead with “quantitative easing.” Chairman Ben Bernanke said that he’d be buying $40 billion dollars of mortgage-backed securities every month, no end in sight.

Now, the traditional way that the Federal Reserve influenced the money supply, economist Randall Holcombe explains, was via “open market operations by buying and selling government securities.” But this changed in 2008 with the $85 billion AIG bailout: “Since then it has engaged in continual bailouts of financial firms and purchases of non-government securities. . . .

The Fed has moved from engaging in monetary policy in a way that was neutral toward various businesses and industries in the economy to one in which monetary policy is targeted toward specific firms and industries. This current foray, specifically targeted at the housing market, is crony capitalism.

It’s actually worse. It’s crank policy, as the redoubtable Mr. Peter Schiff summarizes: “Ben Bernanke’s plan to revive the U.S. economy and create jobs is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy that the Fed wants an encore.”

Our leaders are obviously desperate.

And out of control. George Will states that the Fed has gone far beyond “mission creep” — it’s “mission gallop on part of the Fed, which is on its way to becoming the fourth branch of government — accountable to no one and restrained by nothing, as far as I can tell, in exercising both monetary and fiscal policy.”

This is what forsaking limited government and the Constitution gets you: a sort of frantic idiocy in aid of politically connected speculators and financiers.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

716 Billion Lies

As the campaign for the presidency heats up, we’re going to hear the words “taxes” and “deficit” and “spending” repeated ad nauseam. And this number: $716,000,000,000.

That’s the amount of future Medicare spending that President Obama and the Democrats in Congress (exclusively, without a single Republican vote) cut, slashed, ripped, hacked out of the hands of elderly Americans over the next ten years.

And I thought Democrats loved Medicare, believed in it, wanted to keep it like it is against the bitter schemes of GOP Scrooges!

Now, as Republicans attack the Democrats’ attack on Medicare, Dems have counter-attacked by charging that in his plan GOP VP nominee Paul Ryan cuts Medicare this exact same $716 billion. Ryan explains that his approach simply took the status quo as the baseline, and, sadly, tragically, that includes Obamacare’s nearly trillion dollar malpractice in gutting Medicare funds.

With older citizens constituting a huge voting block, this fall’s election may hinge on this $716 billion being taken from Medicare. Funny thing is, the number is a mirage. Meaningless. Not real. Medicare will not be cut $716 billion. Not really. Instead, it will grow in leaps and bounds over the next decade.

Nothing in Obamacare stops Congress from spending that $716 billion and more in coming years. In fact, they already plan for Medicare spending to grow by far more.

That’s the problem more broadly with the cuts Democrats offer in exchange for higher taxes. The cuts are illusory because the spending continues to grow. Therefore, any tax increases to plug deficit spending would be pouring water into a bucket full of holes.

This is Common Sense. I’m Paul Jacob.

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national politics & policies

Lies You Can Believe In

“Folks, whether the American people believe what I just said or not may be the whole election,” former President Bill Clinton intoned at the Democratic National Convention this week. “I just want you to know that I believe it. With all my heart, I believe it.”

Don’t believe it.

Also not worth believing? Clinton’s television ad, for which, you can be sure, every word was chosen carefully, not just ad-libbed (as some of the gray-haired Lothario’s lines from the convention were said to be):

This election, to me, is about which candidate is more likely to return us to full employment. This is a clear choice. The Republican plan is to cut more taxes on upper-income people and go back to deregulation. That’s what got us in trouble in the first place.

President Obama has a plan to rebuild America from the ground-up — investing in innovation, education and job training. It only works if there is a strong middle class, That’s what happened when I was president. We need to keep going with his plan.

Very persuasive . . . until examined.

Is the current economic depression the result of tax cuts and deregulation? No.

The original implosion was in the mortgage bundle markets, and that was fed by Clintonian homeownership policy and the Federal Reserve’s cheap credit. Regulation had increased dramatically under Bush, and the only bit of deregulation worth talking about was the repeal of Glass-Steagall . . . which Clinton himself signed.

The idea that the prosperity of the Clinton years was caused by his “investment” and “education” and “job training” plans is a howler. Clinton’s era was blessed, instead, with

  1. a mostly stable Fed policy;
  2. Republican opposition in the House that forced him to make his most famous policy moves; and
  3. low gas prices.

This latter was the result of the two most astounding policy moves in the years prior to his administration:

  1. The Carter-Reagan deregulation of the oil industry; and
  2. George Herbert Walker Bush’s sending Saudi Arabia and Kuwait the bill for the Persian Gulf War.

Politics, we must remember, is often dominated by expert liars.

This is Common Sense. I’m Paul Jacob.