The world’s a complex place, and it takes some thought to make sense of it. One of the more useful tools for understanding the social world is economics. And, once you begin thinking in economic terms, there are consequences, as this delightful video from a few years ago neatly shows:
I’m impressed how a simple story line and touch of whimsy helps get the ideas across.
It’s hard to push string. That’s something the marionette masters in Washington are finding out. They’re used to dangling money in front of people. Watch the puppets leap!
But dangling money in front of folks in turn for votes and donations, that’s one thing. Investing in business? Quite another.
You see, businesses serve customers. While government can, indeed, invest in business, that investment doesn’t ensure success.
Developing and offering products on the market that people want to buy — that makes for success.
No matter how nifty something may seem to the investor, if it’s too costly for the targeted consumer — or simply fails to spark consumer fire — the company will not make a go of it, no matter how progressive the government doing the investing.
Sunday’s bankruptcy filing by Beacon Energy, a maker of an innovative flywheel electric energy storage system — energy storage being awfully important for that dubious future where we must rely more on unreliable and uncontrollable sources of energy, like wind and solar — is just another in a long history of failed government investments. In this case, other investors failed to come through.
On the bright side, this time the $43 million in loan guarantees, similar to those pushed to now bankrupt Solyndra, came with better collateral. Thus, this failure didn’t leave quite as big a hole for taxpayers.
Politicians like investing other people’s money (ours) . . . with their own political strings attached. But they hate that those strings lead right back to them when their corporate puppets wind up dead.
This is Common Sense. I’m Paul Jacob.
More than two decades ago, I got involved in my very first initiative campaign.
In 1990, tax-fighter Jim Tobin, then the head of Taxpayers United of Illinois, filed the Tax Accountability Amendment. I organized the petition drive, which gathered more than half-a-million voter signatures to earn a place on the ballot. Polling showed more than 70 percent support for the issue, but a lawsuit by the Chicago Bar Association struck our initiative from the ballot.
The amendment would have mandated a three-fifths vote of both legislative chambers to increase taxes. By requiring public notice and hearings before a tax hike could be enacted, the amendment also promoted transparency in the legislative process — long before the “transparency” buzzword became cool.
Illinois’s very limited initiative process has allowed for only one issue to appear on the state ballot — a successful 1980 measure, cutting back the number of state legislators and electing them in single member districts.
But even without a vote, Tobin wrested a pledge from both candidates for governor to abide by the provisions of the amendment, which the victorious governor stuck to for several years.
Tobin’s group has grown, finding considerable success battling big taxing politicians. It hasn’t forgotten about transparency, either. The group has launched a national campaign to provide the public with information on lavish and unsustainable pensions being collected by public employees.
Tonight, I’ll be with Jim Tobin at a big event in Chicago celebrating the 35th anniversary of his now national anti-tax organization, Taxpayers United of America.
Congratulations, Jim! Thanks for letting me be a part of it.
This is Common Sense. I’m Paul Jacob.
New jobs come from entrepreneurial insight into new ways of profitably producing goods; they are paid for with investments. After a bust, old ratios of prices and wages cease to work, requiring time for entrepreneurs to refigure. But capitalism’s basic scenario — savings, investment, productivity gains, trades — still applies.
Some folks prefer to short-circuit all this, simply robbing Peter to create a job for Paul.
They’re known as politicians.
President Obama proposes spending an additional $447 billion to create jobs, even though our economy is already gummed up with debilitating debt. The Cato Institute’s Dan Mitchell argues that taking money from the economy’s right pocket (taxes) and putting it in the left pocket (spending) doesn’t create economic growth or long-term employment, but, for those who happen “to be sitting in the left pocket . . . [i.e.], a state or local politician that’s getting money from the so-called stimulus,” they think “it’s a good thing.”
Congressman Jesse Jackson, Jr. (D-Illinois) says that the “only way out” of our current mess is to offer every one of the 15 million unemployed Americans a $40,000-a-year job . . . with the federal government.
Most Republican presidential candidates pitch their (quite mythical) job-creating skills, too.
The Republican presidential candidate banned by the national news media — no, not Ron Paul, the other one, former New Mexico Governor Gary Johnson — put it best. “The fact is,” he said at the only debate he was allowed to appear in, “I can unequivocally say that I did not create a single job while I was governor.”
This is Common Sense. I’m Paul Jacob.
Media people interpose themselves between current events and the news audience. They consider it their job to sort out “the issues” before news consumers even start thinking.
This is the source of media power.
Recent investigations into current media coverage of the GOP presidential race shows that the basic media bias may not be pro-liberal/anti-conservative, but, more generally, anti-libertarian. Ron Paul’s candidacy, though receiving an amazing amount of support from enthusiastic fans and generous donors (Rep. Paul has quite a kitty going into the campaign), has garnered (according to a recent Pew Research Center study) little news coverage to match his popular success: Less, even, than Santorum.
But is ideological bias at the root of the problem? After all, each candidate has a personality, and personality is obviously a big factor in show biz success. And politics, it has been said, is show biz for homely people. No wonder political coverage looks more like junior high and high school tribalism than a truly mature enterprise.
According to the irreverent H.L. Mencken, journalists like to play messiah. Thinking they can “save the day” every day, they tend to favor those politicians who treat the eternal rescue mission of government policy with a cheaply salable scenario. Paul, in identifying government more often as a problem than a solution, horns in on the public rescue biz.
Maybe this helps explain why “Ron Paul did markedly better in the blogosphere than in the press.” And why journalistic coverage swings more extremely than does blogosphere coverage.
This is Common Sense. I’m Paul Jacob.
Have you heard the terrible, awful news?
Over roughly the last three decades, specifically from 1979 to 2007, Americans across all segments of the economy — from the poorest to the richest — have seen their incomes rise.
It just doesn’t get any worse, eh?
If you haven’t committed hara-kiri, here are the cold, hard facts from the Congressional Budget Office report:
One might think that universally higher incomes are a good thing, but that depends on how you look at it.
“If you think of America’s total income as one giant pie,” an ABC World News Tonight report explained, “the richest one percent have seen the size of their piece double over the last 30 years. And everyone else has seen their piece get smaller.”
Well, I’m really hoping that we won’t start thinking of all our incomes as “one giant pie.”
What about this 99 percent versus 1 percent warfare?
That’s media slant. Most Americans don’t begrudge someone good fortune, and affirmatively admire those who grow wealthy in return for smarts and hard work.
But they do oppose bailouts.
This is Common Sense. I’m Paul Jacob.
Excellent testimony by Prof. Russ Roberts of George Mason University about the government bailout of the financial sector. Naming Bush, Obama and Congress, Prof. Roberts charges: “You’ve helped risk-takers continue to expect that the rules that apply to the rest of us don’t apply to people with the right connections. You’ve saved the system, but it’s a system not worth saving. It’s not capitalism; it is crony capitalism.”
Let’s keep this common sense in mind.
President Barack Obama says “it’s only right that we ask everyone to pay their fair share in taxes.”
Rich folks must be wondering when their refund checks will start arriving in their mailboxes.
The current income tax is progressive, requiring those making more to pay a higher rate. Thus, those earning a million dollars pay, on average, 29 percent of their income to Uncle Sam, while those taking home $50,000 to $75,000 a year pay an average of 15 percent. This progressivity can be seen in wide angle, too: Figuring credits and exemptions, 47 percent of Americans pay no federal income tax at all. Meanwhile, the top ten percent in income pay 73 percent of all income taxes collected.
And Obama’s idea of taxing “the rich” would only make it more unfair.
But, wait, what about billionaire Warren Buffett? Doesn’t he pay a lower percentage of his income in taxes than does his secretary?
Most of Buffett’s income comes off his investments, not in salary. That’s capital gains, taxed at 15 percent. Obama decries it, but doesn’t propose any specific increase in capital gains taxes. Why? He doesn’t want the stock market to crater. As he put it two years ago, “The last thing you want to do is raise taxes in the middle of a recession.”
So, when President Obama says the rich should pay their fare share, what does he mean? Simple: “If you’re not rich, vote for me.”
This is Common Sense. I’m Paul Jacob.
By all accounts I’ve read, the 99 percenters in the “Occupy X” (fill in the “X” with your nearest protest city) movement seem obsessed with income inequality.
I, too, am concerned with the very rich — the bailouts of the very rich. I was against bailouts from the start. The moral hazard of a bailout mentality is extremely dangerous, inimical to a free society.
But that doesn’t make me a 99 percenter.
Why? Well, protestors on the streets believe — well, 49 percent of them believe — that the bailouts were necessary!
How odd. They distrust the rich. They want to tax the rich more. And yet, when the rich fail, they think it vital to “help the rich out.” Is this a result of simply believing in “helping people out in times of trouble”? Or do 49 percent of 99 percenters believe that the wealth of the well-to-do is so vital to the economy that their status as wealthy folks must be guaranteed?
I think it’s probably the latter. Leaning left, 99 percenters are committed to government “management” of the economy. And that includes bailing out unsuccessful rich folks as well as the unsuccessful poor and middle-class folks.
Were they really against inequality, wouldn’t they be happy now that the wealthy have taken a hit, and income inequality has been reduced? At least to a small, Schadenfreude extent?
Apparently, government being in control is the real bedrock issue. For X percent, anyway — X representing a shockingly high number of protestors.
This is Common Sense. I’m Paul Jacob.
When all you have is a hammer, every problem looks like a nail. When it comes to “jobs,” our politicians prove the truth of this adage over and over. They think that they have to “do something,” or at least “look busy” providing “leadership.”
Wrong — unless they take the lead to get out of the way.
Alas, few have the courage for that kind of leadership.
Republican politicians — fearing “looking bad” — are, even now, floating various “plans” to create “jobs.”
“I thought it was incumbent on me to at least say . . . ‘We’re working on a plan,’” says one incumbent.
Trouble is, whatever plan he or his colleagues put up to counter the president’s absurdities, odds are that it, too, will not work.
Why?
The trouble with markets right now is uncertainty. Several sectors went bust, and it’s not easy to get progress started again . . . especially when the government keeps cooking up game-changers. Solutions. “Fixes.” Political machinations — subsidies or regulations or any of the usual tools in the politicians’ tool belt — just increase uncertainty, muddying up the recovery.
The neat thing about markets is that none of us need to know how, exactly, to order the “economy” for order to be discovered. It works out. This is old wisdom, but even actual experimentation has shown that this is the case.
The economy is not a mess of boards half-nailed down. The last thing it needs is more hammering from politicians.
This is Common Sense. I’m Paul Jacob.