Monthly Archives: December 2012

“Friedman Friday” EPISODE “The Failure of Socialism” of Free to Choose in 1990 by Milton Friedman (Part 2)

December 14, 2012 – 1:09 am

Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full)

Published on Mar 19, 2012 by

Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you.

Ronald Reagan introduces this program, and traces a line from Adam Smith’s “The Wealth of Nations” to Milton Friedman’s work, describing Free to Choose as “a survival kit for you, for our nation and for freedom.” Dr. Friedman travels to Hungary and Czechoslovakia to learn how Eastern Europeans are rebuilding their collapsed economies. His conclusion: they must accept the verdict of history that governments create no wealth. Economic freedom is the only source of prosperity. That means free, private markets. Attempts to find a “third way” between socialism and free markets are doomed from the start. If the people of Eastern Europe are given the chance to make their own choices they will achieve a high level of prosperity. Friedman tells us individual stories about how small businesses struggle to survive against the remains of extensive government control. Friedman says, “Everybody knows what needs to be done. The property that is now in the hands of the state, needs to be gotten into the hands of private people who can use it in accordance with their own interests and values.” Eastern Europe has observed the history of free markets in the United States and wants to copy our success. After the documentary, Dr. Friedman talks further about government and the economy with Gary Becker of the University of Chicago and Samuel Bowles of the University of Massachusetts. In a wide-ranging discussion, they disagree about the results of economic controls in countries around the world, with Friedman defending his thesis that the best government role is the smallest one.
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Below is a portion of the transcript of the program and above you will find the complete video of the program:
 

Here is another real success story, this time in Czechoslovakia. Martin was a rock musician. Today he makes documentary films. Some years ago, he did a concert tour of the United States and brought back secondhand recording equipment. The communist government let him bring it back, after paying a hefty import tax, because he said he wanted to record folk music __ something the government was not doing and did not plan to do.

In the past year, since things have opened up, his business has exploded. Along with music and films, he now duplicates video cassettes. He also makes audio cassettes for other Czech producers and has devised his own English language course on tape. He is on his way and many more will follow if the government just gets out of their way. You just can’t keep good people like that down.

The guests at this party aren’t much interested in self-driving entrepreneurs like Martin. High powered business executives from North America and West Europe __ they are interested in bigger game. They are here to do business and make good profits for their firms. They’ll do it by arranging joint ventures between their western companies and government enterprises. To succeed, they have to get on the right side of the politicians and the bureaucrats who are in charge. It is large scale lobbying, very much in the western manner. The danger is that in the process, local government bureaucrats and big foreign business will end up freezing out local entrepreneurs.

Friedman: The assets of Hungary belong to the people of Hungary. I do not believe they should be sold. You are a citizen of Hungary, who owns the state enterprises?

Unknown: Okay, the society as a whole.

Friedman: Not the society, the people.

Unknown: Well, give it to the people.

Friedman: In finance ministries all over Eastern Europe, the talk is all about privatization, but rhetoric is one thing __ action sometimes very different.

One example is in Prague where Vacla Klouse, the finance minister, is desperately trying to free the Czech economy.

Vacla Klouse: The people who were the reformers at that time were done after the Russian invasion, they were fired from their jobs and they return to politics with their own extremely obsolete ideas, and now they are trying . . .

Friedman: But he is up against political planners that aren’t ready to give up control. They are all anticommunists, all in favor of markets, but many are still beguiled by the idea of market socialism. A third way between capitalism and socialism, Klouse and I believe that is a mirage __ that a third way will take Czechoslovakia straight to the third world. It must either move directly to a pure free market, or it will get stuck just as Yugoslavia has.

Klouse: . . . I think intellectuals tend to underestimate the intelligence of the ordinary people . . .

Friedman: Poland and Hungary have exactly the same problem. Some, like Klouse, want to move to free markets right away. Others still hanker after socialist control of the markets.

Klouse: . . . use the word naive citizens. They are the interventionist economies and the other, so this is my speech in the parliament . . . . . .

Friedman: Political power is limited, but economic power is not limited and you can have, if you have one millionaire, you can have another millionaire, another millionaire, without anybody else being worse off. In fact, everybody else will be better off. It seems to me again, the people understand that. I can’t believe that your ordinary people here don’t. They know overnight you can make a change if you could only get the government off the back of the people.

Where are we headed __ we are heading all the way up here __ we’ll get there. Let’s not get any more gas than we need to. What is it? It is about $1.00 a liter which makes it about $4.00 a gallon of gas.

In these countries, the hardest problem is to transform their heavy industries. This is Novahoota, a vast collection of steel mills in Poland and a disaster in every sense. It is inefficient, costly, and above all, a major polluter. The best thing to do with places like this would be to bulldoze them, but that is almost impossible. They are too well shielded by special interests: the unions, the bureaucrats, and all the other political interests on the fringes.

The communists socialize the means of production. They tried to run everything from the center. It didn’t work. It was a mess and a failure. We in the United States, on the other hand, have been socializing the fruits of production. That is, the government has been taking money from some people, the people who produce the goods and services, and giving it to other people who do not produce goods and services. The end result is likely to be the same loss of incentive and organization if we carry it too far. That is one lesson we should learn from these countries.

A year ago, the cornucopia of fruits and vegetables and other things in this street market were simply not obtainable. It is one of the first signs of the flowering of enterprise under the new regime. This market is in Krakow, Poland. Goods are readily available now, only because the government eliminated price controls allowing the market to set the prices. Like a miracle, overnight the stalls had goods for sale. This gentleman sells bulbs and seeds. He is happy in the market, but many traders would like to set up in stores and develop on a larger scale. At the moment, they can’t. The stores are all owned by the state. The traders are stymied unless and until the stores become private property. When they do, the market will get another boost.

This youngster is 16. He is still in high school, but this is Saturday and he is in the market selling jeans from Thailand, making a little money for himself. He is studying to be a gardener. But when I asked him what he was going to do when he left school, he had no hesitation __ he was going to be a businessman. There is the hope of Poland.

Everybody knows what needs to be done. The property that is now in the hands of the state need to be gotten into the hands of the private people who can use it in accordance with their own interests and values. The problem is how to do it. Now that you have some degree of political freedom, there is an awful fight going on about who is going to get what share of the total pie. Everybody wants a little bigger piece. It is a political mine field, but unless that mine field can be gotten through, the game is up. It will be a failure. If it can be gotten through, then you will have an opportunity for these resources to be used the right way for the right things.

We in the West know only too well how hard it is to get the government out of something once they have been in it. Here in Poland they have been in it for 50 years and in a much bigger way than the United States. So they have a real job on their hands.

It would be silly of us, on the basis of a brief trip, to try to judge how successful these countries will be in doing what no country has yet been able to do __ transform a totalitarian state into a prosperous, free society. If this experiment is successful, it will not only transform Eastern Europe __ it will also offer an invaluable blueprint for the economic development of many poor countries.

You know, nothing is more striking than the wide differences in the standard of life of people who live in different parts of the world. Why? Not because of race or religion or culture or natural resources. After all, the Chinese who live in Hong Kong and in Taiwan are of the same race and background as those who live in Red China, yet their standards of living are vastly different. The same thing is true of East Germany and West Germany; of South Korea and North Korea; of Japan before the major restoration and Japan after the major restoration. The real explanation are the economic institutions that they adopt __free private markets versus central planning.

The countries of Eastern Europe have finally overthrown their communist masters who foisted central control on them. They have the rare opportunity to write on a clean slate; to create the institutions of private property and free markets that are the only ones that have ever achieved widespread prosperity and human freedom. We in the United States, on the basis of our experience of the last 10 years, know how hard it is to cut a government down to size. We hope they succeed better than we did. If they do, we will learn as much from them as they have learned from our example.

By Everette Hatcher III | Posted in Milton Friedman, President Obama | Comments (0)

Fiscal Cliff deals of the past

December 13, 2012 – 7:02 am

Does Government Have a Revenue or Spending Problem?

People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too much spending, or too little tax revenue? Economics professor Antony Davies examines the data and concludes that the root cause of the debt is too much government spending.

Ronald Reagan on our ability to solve our problems

Great article on what has happened in the past fiscal cliff deals. Patrick Louis Knudsen rightly points out, “… history shows that broad bipartisan compromises between the White House and Congress have typically just yielded higher taxes, while … deficit reduction have failed to materialize.”

It seems to me that we need to cut spending and avoid slowing the economy with tax increases. In the past we just raised taxes most of the time and never got around to cuttng spending.

The Fiscal Cliff and the Perils of Grand Budget Deals

By
December 10, 2012

One of the major complications in the current fiscal cliff debate is that both sides are overreaching, trying to tie a near-term resolution to a sweeping deficit reduction plan that would address the longer-term budgetary crisis looming in the years ahead. They see the cliff negotiations as a stage for a “grand bargain” on the budget between the President and Congress.

The tight time frame of the cliff’s approach makes such an aim increasingly impractical. Furthermore, history shows that broad bipartisan compromises between the White House and Congress have typically just yielded higher taxes, while the promised spending restraint (except in national defense) and deficit reduction have failed to materialize. Given the current state of divided government, these risks prevail today. More broadly, they also offer a warning to budget process reformers who seek to institutionalize regular budget negotiations between Capitol Hill and the President.

Experience of the Reagan Administration

After his inauguration in January 1981, President Ronald Reagan moved assertively to enact his budget plan, cutting taxes, boosting defense spending, and seeking to gain control of entitlements. With the economy still reeling from the prior years’ stagflation, however, deficits widened initially, leading Congress to push for a series of budget “summits,” as they were called then, to close the gap.

First came the 1982 Tax Equity and Fiscal Responsibility Act, “a $98 billion tax increase which supporters claimed would reduce the deficit from $128 billion in 1982 to $104 billion in 1983.” It did not. “Spending restraints never materialized…and the actual deficit jumped to $208 billion.”[1] (In today’s dollars, that tax hike would have totaled $204 billion and the deficit $432 billion—roughly a third of this year’s red ink.)

In 1984, the President agreed to yet another tax hike totaling $49 billion, which was supposed to reduce the deficit from $185 billion to $181 billion. Once again, however, the deficit increased—to $212 billion.[2]

The 1987 budget summit repeated the pattern. President Reagan swallowed a tax hike of $28 billion, but the result was the same: “The deficit, which was supposed to remain at $150 billion, jumped to $155 billion in 1988.”[3]

The 1990 Budget Agreement

Despite these failures, 1990 produced another major exercise in budget summitry. With deficits having swollen well beyond target amounts written in law at the time, the government by mid-year faced automatic spending cuts (called “sequestration”) that would slash defense spending by 42 percent and non-defense spending by 38 percent.[4] So President George H. W. Bush and the Democratic Congress agreed to a plan that was estimated to reduce deficits by $482 billion over five years.

Though the President had famously pledged never to raise taxes, his Administration by mid-1990 conceded to adding “revenue” as part of the deficit reduction plan. Predictably, this crack in the door widened during the arduous negotiations at Andrews Air Force Base. In the end, fully one-third of the package—$158 billion—consisted of tax hikes. The next largest savings came from cutting national defense by $91 billion over five years, which proponents rationalized by arguing that the Cold War had ended. Meanwhile, non-defense discretionary spending in the plan actually increased by $45 billion, offset by an empty promise of $144 billion in additional, unspecified discretionary cuts.[5]

The plan’s outcomes were no more satisfying. Even after the defense cuts, total outlays (excluding interest payments) increased by 13 percent from 1990 through 1993, and even with the tax hikes, the deficit worsened by 17 percent in the first two years of the plan.[6] When President Bill Clinton took office in January 1993, he promptly called for another deficit reduction plan, this one with $241 billion in tax increases over five years.[7]

The 1997 Balanced Budget Agreement

Even genuinely successful deficit reduction can lead to expanded government, allowing both parties to declare victory. Such was the case with the 1997 balanced budget agreement between a Republican Congress and President Clinton.

Although it cut taxes by $80 billion over five years—or perhaps because it did—the plan produced surpluses within a year of enactment. This was largely due to real growth in gross domestic product (GDP) that was greater than 4 percent per year from 1997 through 2000, which boosted tax revenue to 20.6 percent of GDP.

The problem was that the plan also increased spending. Though officially estimated to reduce outlays by $198 billion over five years,[8] the legislation contained a number of entitlement spending increases sought by President Clinton, including the creation of the State Children’s Health Insurance Program and expansions of food stamps, Supplemental Security Income, and welfare. Consequently, total “programmatic” spending (excluding interest) grew by nearly 3 percent to 4 percent per year faster than inflation and exploded by a total of nearly 14 percent from 1997 through 2001.[9] The effect was hidden because with the government running budget surpluses, interest payments declined, reducing the total spending increases.

Learn from History

The background outlined above should give pause to advocates of a grand budget deal between the President and Congress—especially those who are seeking to limit the size and scope of government. Such agreements tend to produce higher taxes and higher spending with little or no deficit reduction. Congress and the President should dispel any visions of a “grand bargain” and focus on the task at hand: avoiding the fiscal cliff.

This history also warns against budget process reforms that would institutionalize summitry by requiring the President to sign or veto the congressional budget resolution. Advocates argue that this change would create a forum for regular, early White House–congressional negotiations on broad budget levels, presumably making it easier to settle on specific spending and tax legislation later.

Some analysts, however, doubt whether the practice would actually produce agreements as often as its advocates think.[10] Equally important, the process could produce higher spending and higher taxes even more often. Thus, a reform aimed at budgeting more “efficiently” might only be more efficient at expanding government.

Patrick Louis Knudsen is the Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Kaitlyn Evans and Paul Bremmer, members of the Young Leaders Program at Heritage, contributed to this report.

By Everette Hatcher III | Posted in President Obama, Ronald Reagan, spending out of control, Taxes | Comments (0)

Francis Schaeffer’s own words concerning religious liberals and humanists

December 13, 2012 – 6:48 am

Pt 1 of 2 Listen to this Important Message by Francis Schaeffer

Published on Sep 30, 2013

This message “A Christian Manifesto” was given in 1982 by the late Christian Philosopher Francis Schaeffer when he was age 70 at D. James Kennedy’s Corral Ridge Presbyterian Church.
Listen to this important message where Dr. Schaeffer says it is the duty of Christians to disobey the government when it comes in conflict with God’s laws. So many have misinterpreted Romans 13 to mean unconditional obedience to the state. When the state promotes an evil agenda and anti-Christian statues we must obey God rather than men. Acts
I use to watch James Kennedy preach from his TV pulpit with great delight in the 1980’s. Both of these men are gone to be with the Lord now. We need new Christian leaders to rise up in their stead.
To view Part 2 See Francis Schaeffer Lecture- Christian Manifesto Pt 2 of 2 video
The religious and political freedom’s we enjoy as Americans was based on the Bible and the legacy of the Reformation according to Francis Schaeffer. These freedoms will continue to diminish as we cast off the authority of Holy Scripture.
In public schools there is no other view of reality but that final reality is shaped by chance.
Likewise, public television gives us many things that we like culturally but so much of it is mere propaganda shaped by a humanistic world and life view.

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Pt 2 -Listen to this Important Message by Francis Schaeffer

I was able to watch Francis Schaeffer deliver a speech on a book he wrote called “A Christian Manifesto” and I heard him in several interviews on it in 1981 and 1982. I listened with great interest since I also read that book over and over again. Below is a portion of one of Schaeffer’s talks  on a crucial subject that is very important today too.
A Christian Manifesto
by Dr. Francis A. Schaeffer
This address was delivered by the late Dr. Schaeffer in 1982 at the Coral Ridge Presbyterian Church, Fort Lauderdale, Florida. It is based on one of his books, which bears the same title.

Liberal theology is humanism with religious words 

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Now, we cannot be at all surprised when the liberal theologians support these things, because liberal theology is only Humanism using theological terms, and that’s all it ever was, all the way back into Germany right after the Enlightenment. So when they come down on the side of easy abortion and infanticide, as some of these liberal denominations as well as theologians are doing, we shouldn’t be surprised. It follows as night after day.
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It is not possible to know where the pro-life evangelicals are coming from unless you look at the work of the person who inspired them the most. That person was Francis Schaeffer.  I do care about economic issues but the pro-life issue is the most important to me. Several years ago Adrian Rogers (past president of […]

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This essay below is worth the read. Schaeffer, Francis – “Francis Schaeffer and the Pro-Life Movement” [How Should We Then Live?, Whatever Happened to the Human Race?, A Christian Manifesto] Editor note: <p> </p> [The following essay explores the role that Francis Schaeffer played in the rise of the pro-life movement.  It examines the place of […]

Who was Francis Schaeffer? by Udo Middelmann

Great article on Schaeffer. Who was Dr. Francis A. Schaeffer? By Francis Schaeffer The unique contribution of Dr. Francis Schaeffer on a whole generation was the ability to communicate the truth of historic Biblical Christianity in a way that combined intellectual integrity with practical, loving care. This grew out of his extensive understanding of the Bible […]

By Everette Hatcher III | Posted in Francis Schaeffer | Comments (0)

Open letter to President Obama (Part 192)

December 13, 2012 – 6:30 am

 

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

We seem to be spending too much like Greece then why do we expect a different result?

Amy Payne

June 18, 2012 at 9:04 am

The President and his team have been blaming “European headwinds” for some of the U.S. economy’s woes. But the truth is that the policies pursued by Washington and Athens are frighteningly similar—and the outcomes are not good for either country. Both countries are in need of comprehensive fiscal reforms, yet their leaders have avoided the tough decisions in favor of bailouts and political posturing.

In yesterday’s election, political parties supporting Greece’s bailout secured a narrow victory, causing Europe and world markets to breathe a temporary sigh of relief. The parties must now form a coalition government, despite continued protests from the radical party that sought to throw out the terms of the bailout assistance—which could have led Greece out of the euro currency. At 22 percent unemployment, Greek voters expressed disappointment with their limited options.

The Greek crisis was foreshadowed in this year’s Heritage Foundation/Wall Street Journal Index of Economic Freedom, with Greece registering the largest decline in economic freedom of any country in the world. Its economy is rated “mostly unfree,” and it has the fifth-lowest economic freedom score in Europe, beating only Russia and three former Soviet republics.

Why is it in such a state? The authors of the Index point to “decades of overspending, a lack of structural reform progress, and endemic corruption,” noting that Greece’s “lack of competitiveness and fading business confidence are serious impediments to economic revival. Adjustments in market conditions have been stifled or delayed by public unions.”

Sound familiar?

It should, because the similarities between the U.S. and Greece are alarming. Two years ago, Heritage’s J.D. Foster said that “We’re not Greece…yet.” Since he wrote that in May 2010, however, U.S. debt has nearly doubled as a share of the economy. Greece’s public debt, at 165 percent of gross domestic product (GDP), doesn’t seem that unreal any more.

A few other points of comparison: The U.S. corporate tax rate is higher than Greece’s. The Index of Economic Freedom pegged America’s overall tax burden at 24 percent of total domestic income, while Greece’s overall tax burden was 30 percent of GDP. Government spending inAmerica—42 percent of GDP—approaches Greece’s government spending level, which exceeds 50 percent of its GDP.

Both countries have structural economic deficiencies—like tax rates and labor regulations—that are causing deeply rooted problems. And both countries have tried to solve their fiscal problems through bailouts, to no avail.

Though it goes back to the adoption of the euro in 1999, the European crisis first broke into the open some 10 years later. In April 2009, the European Union told France, Spain, Ireland, and Greece to reduce their budget deficits in the wake of the credit crisis. Since the crisis began, Europe has substantially weakened its banking system, which is propped up only by central bank cash and shaky bailouts.

Now, defaulting on loans is a real possibility for Greece and other European nations. They have too long dismissed the need for economic growth in favor of government intervention.

Going into the G20 summit today and tomorrow in Mexico, President Obama “has called on European leaders to recapitalize weak banks and to focus on economic growth and not just budget austerity,” reports Reuters. Basically, he has been urging European governments to spend more now, even as their borrowing costs and debt far exceed sustainable levels. One wonders how countries that have limited or no access to credit markets because of their dire fiscal situations are supposed to borrow the money for all this additional spending. There is only one substantive difference between Obama’s policies for Europe and his domestic policy, where he has urged expanding government jobs as a solution to U.S. unemployment: The U.S. government can still borrow to finance its deficits, because we’re only partway down the road the Greeks have already traveled.

The overspending, overtaxing, over-borrowing and over-regulating approach does not work for Europe any more than it works for America.

To deal with any European financial fallout that might affect the U.S., we have to stop embracing the same policies. Congress and the President should rein in federal spending immediately by choice rather than being eventually forced to do so, as countries across Europe have been. They should declare a regulatory cease-fire and disarm the Taxmageddon threat.

America is responsible for its own economic problems, regardless of the winds sweeping across the Atlantic.

_____________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

By Everette Hatcher III | Posted in President Obama, spending out of control | Comments (0)

Dear Senator Pryor, why not pass the Balanced Budget Amendment? (“Thirsty Thursday”, Open letter to Senator Pryor)

December 13, 2012 – 6:14 am

Stearns Speaks on House Floor in Support of Balanced Budget Amendment

Uploaded by on Nov 18, 2011

Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011

___________

Dear Senator Pryor,

Why not pass the Balanced  Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion).

On my blog www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, I did not see any of them in the recent debt deal that Congress adopted. Now I am trying another approach. Every week from now on I will send you an email explaining different reasons why we need the Balanced Budget Amendment. It will appear on my blog on “Thirsty Thursday” because the government is always thirsty for more money to spend.

Below are some of the main proposals of Milton Friedman. I highly respected his work.

David J. Theroux said this about Milton Friedman’s view concerning the Balanced Budget Amendment:

Balancing the Budget: Since deficit spending is simply a device for hiding tax increases, thereby lowering taxpayer resistance to government spending and impairing economic growth, all government spending should be handled according to the merits of each specific proposal in a pay-as-you-go basis. Fiscal policy should never be used to affect business cycles, and the Balanced Budget Amendment should be adopted.

Here is some more about Friedman’s life:

Milton Friedman (1912-2006)
By David J. Theroux  |  Posted: Sat. November 18, 2006

“Milton Friedman is a scholar of first rank whose original contributions to economic science have made him one of the greatest thinkers in modern history.”
—President Ronald Reagan

“How grateful I have been over the years for the cogency of Friedman’s ideas which have influenced me. Cherishers of freedom will be indebted to him for generations to come.”
—Alan Greenspan, former Chairman, Federal Reserve System

“Right at this moment there are people all over the land, I could put dots on the map, who are trying to prove Milton wrong. At some point, somebody else is trying to prove he’s right That’s what I call influence.”
—Paul Samuelson, Nobel Laureate in Economic Science

“Friedman’s influence reaches far beyond the academic community and the world of economics. Rather than lock himself in an ivory tower, he has joined the fray to fight for the survival of this great country of ours.”
—William E. Simon, former Secretary of the Treasury

“Milton Friedman is the most original social thinker of the era.”
—John Kenneth Galbraith, former Professor of Economics, Harvard University

“There are various ways to describe Friedman’s influence. But one way is to ask, ‘Has he helped many people—poor people in the world?’ And I would just take India and China, 37% of the world’s population. Hundreds of millions of people in these two countries, who used to live on less than one dollar a day or two dollars a day, are now able to live at a much more decent standard of living as a result of the reform of their economic policies toward more free-market policies, less regulation, less government and the like. There was one person who they are more indebted to than anybody else for their great improvement in their situation. In my judgment, that person is Milton Friedman.”
—Gary S. Becker, Nobel Laureate in Economic Science

Economist and former Newsweek columnist Henry Wallich has credited Milton Friedman with having “almost single-handedly” changed economic thinking on the subject of money.1 Indeed, Milton Friedman, the 1976 Nobel Laureate in Economic Science, was a world-renowned economist and an academician of the finest caliber. But he was much more. He was an articulate and persuasive advocate of individual freedom, and the private property, voluntary exchange economy, which is based upon and sustains that freedom. British Prime Minister Margaret Thatcher has stated, “Professor Friedman is usually referred to as a monetarist, but his basic belief is not in money. It’s in people’s inherent right and ability to choose how they will live.”

Among his proposals were the following:

Negative Income Tax: To eliminate the massive welfare system’s disincentives and enormous waste, abolish all welfare programs and replace them with a program of direct cash payments to those actually in need simply by adding a new income tax bracket (one for negative values of taxable income) to the tax code.

Educational Vouchers: To provide a competitive climate for public and private education, all parents of primary and secondary school children would be issued government vouchers to be spent at the school of their choice. Government’s only role would be to provide the vouchers; competition for clients would assure quality and innovation.

Flat Income Tax: To streamline the tax system and to lower its enormous direct costs to the general public and the indirect inefficiencies imposed on the economy, abolish the corporate income tax. In addition, tax individuals only at a non-progressive, low, flat rate, raising personal exemptions to some minimum income level, and ending all loopholes.

Stable Money Growth: To eliminate the recurring problems of inflation, unemployment, and decreased productivity, abolish the Federal Reserve System, legalize private monies, and peg the increase of the government money supply to the growth in GNP, perhaps 0 to 3 percent per year.

Floating Exchange Rates: To solve the nation’s balance-of-payments problems and to open the possibility of unilaterally eliminating anti-consumer protectionist measures, abolish exchange controls and let national and private currencies seek their own price levels in the market.

Balancing the Budget: Since deficit spending is simply a device for hiding tax increases, thereby lowering taxpayer resistance to government spending and impairing economic growth, all government spending should be handled according to the merits of each specific proposal in a pay-as-you-go basis. Fiscal policy should never be used to affect business cycles, and the Balanced Budget Amendment should be adopted.

Volunteer Army: To create a more efficient, better motivated, and morally tenable defense system, abolish the compulsory servitude of the draft and draft registration and maintain a voluntary system of enlistment based on competitive benefits and professional, career-oriented training.

No Victimless Crime Laws: To direct limited police and legal resources to the problems of violent crime, eliminate all laws creating “crimes with no victims.” More specifically, where consent is present between two or more adults no criminal injustice can be possible; hence, for Friedman government has no place in proscribing or regulating such areas as prostitution, profanity, pornography, drugs, and so forth. In this regard, Friedman was not condoning any such behavior, but instead noting that these and all non-invasive matters are best regulated by property owners via private-property agreements and institutions, as opposed to government command-and-control. Moreover, Friedman agreed with the late Harvard philosopher Robert Nozick’s position that such practices should be equally legal along with all “capitalist acts between consenting adults.”13

As a result of his devotion to individual freedom, Friedman was an early and vocal supporter of California’s Proposition 13 to reduce property taxes across-the-board, as well as President Ronald Reagan’s original proposal to cut individual and corporate income tax rates. He was opposed to price controls, farm subsidies, securities and exchange controls, tariffs, and, in fact, all government interventions into the peaceful pursuits of individuals. To Friedman, government’s role should be stringently restricted to defending the nation from foreign enemies, defending persons from force and fraud, providing a forum for decisions of the general rules determining property and similar rights, and providing a means to mediate disputes about the rules.

Perhaps Friedman’s greatest success began in 1979 when he and his wife Rose authored the book, Free to Choose, based on the famous ten-part TV series for PBS by the same title. Both the TV program and the book were drawn from an earlier series of lectures presented by Friedman. Because it aired during a period of critical economic distress during the Carter Administration and in the aftermath of the Vietnam War, Watergate scandal, and Richard Nixon’s resignation as President, the program is widely regarded as being a major factor in shifting American public opinion toward appreciating the need to dismantle government largess. The series was shown in England, Japan, Italy, Australia, Germany, Canada, and many other countries, and the book was translated for distribution around the world, selling more than one million copies.

As a result of his impact on academic and public opinion, Friedman was an economic advisor to 1964 Republican presidential candidate Barry Goldwater; Presidents Ronald Reagan, Gerald Ford, and Richard Nixon; as well as British Prime Minister Margaret Thatcher. But throughout this time, he consistently turned down full-time positions in government, preferring to continue his scientific work and leave public activities to full-time policymakers.

In addition, Friedman’s ideas were critically influential in the economic liberalization reforms in such countries as Estonia, Chile, Ireland, China, New Zealand, Czech Republic, and India. In the process, he was accused of complicity in the repressive regimes of Chilean dictator Augusto Pinochet and in Communist China. However, Friedman maintained that in advising any government, in no way was he supporting any policies that run counter to the principles of individual liberty. Indeed, he indicated that he instead sought to end all policies of oppression.

In short, Friedman believed that government’s sole functions should be to provide civil policing and justice plus national defense. For the latter however, he went further than merely supporting the protection of national borders from invaders. In the aftermath of World War II, Friedman became a supporter of the Cold War and the Wilsonian legacy of U.S. military interventionism around the world. This led him to support the Vietnam War and other overt and covert U.S. policies. However, in the process, he noted that, “I’m anti-interventionist, but I’m not an isolationist,”14 and upon reading the 1987 landmark book by Independent Institute Senior Fellow Robert Higgs, Crisis and Leviathan, which shows that war “crises” are the major engine of the very neo-mercantilism and Big Government he long opposed, Friedman became an increasing critic of “wars of choice,” including the war in Iraq.

The Friedman’s were married for 68 years and had two children: David, who teaches law and economics at Santa Clara University, and Janet, who practices law in California.

To recognize the enormous contributions of this man, I had the distinct pleasure and privilege to organize the gala National Dinner to Honor Milton Friedman on October 4, 1983, at the Fairmont Hotel in San Francisco, at which then struggling actor Arnold Schwarzenegger, who had been inspired by the “Free to Choose” TV series, first met Friedman in person.

In addition to the Nobel Prize, Friedman was the recipient of the Grand Cordon of the First Class Order of the Sacred Treasure of Japan (1987), National Medal of Science (1988), and Presidential Medal of Freedom (1988), and he was a member of the American Philosophical Society and the National Academy of Sciences.

In 1998, Milton and Rose Friedman penned their autobiography, Two Lucky People: Memoirs, which traces their remarkable personal journey and life experiences, and they both spent recent years working together pursuing their dream of educational choice for all parents throughout the U.S.

Milton Friedman died on November 16, 2006, from heart failure, in San Francisco. Unlike any other intellectual figure of the twentieth century, he transformed public debate away from the suicidal path of command economies and toward economies based on individual choice, free markets, and personal responsibility. Friedman was brilliant, creative, resilient, and effective. In his career, including the thirty years that I had the pleasure of knowing him, he was a champion who sought to facilitate greater opportunity for all, especially those most in need. In economics, education, finance, business, civil liberties, welfare, and a host of other areas, he has left a powerful legacy for the benefit of humanity.

Notes

1. John Davenport. “The Radical Economics of Milton Friedman,” Fortune, 1 June 1967, p. 131.

2. “Milton Friedman,” Current Biography 1969 (Bronx, NY: H.W. Wilson Company), p. 151.

3. “Milton Friedman,” Les Prix Nobel en 1976 (Stockholm: The Nobel Foundation, 1977), p. 239.

4. Karl Brunner. “The 1976 Nobel Prize in Economics,” Science 194 (November 5, 1976), p. 595.

5. Current Biography, p. 152.

6. Les Prix Nobel en 1976, pp. 240-41.

7. Current Biography, p. 152.

8. Les Prix Nobel en 1976, p. 241.

9. Ibid.

10. Current Biography, p. 152.

11. Milton Friedman. “He Has Set a Standard.” Wall Street Journal (June 31, 2006).

12. Milton Friedman. “Introduction.” New Individualist Review (Indianapolis: Liberty Press, 1981), pp. ix-xiv.

13. “Portrait: Milton Friedman,” Challenge (May-June 1978), p. 69; Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962); and Milton and Rose Friedman, Free to Choose (New York: Harcourt Brace Jovanovich, 1980).

14. “Best of Both Worlds: Milton Friedman reminisces about his career as an economist and his lifetime ‘avocation’ as a spokesman for freedom,” Reason (June 1995).

David J. Theroux is the Founder, President and Chief Executive Officer of The Independent Institute and Publisher of The Independent Review.__________Thank you again for your time and for this opportunity to share my ideas with you.

Sincerely,

Everette Hatcher
By Everette Hatcher III | Posted in spending out of control | Comments (0)

Remembering Francis Schaeffer at 100 (Part 13)

December 13, 2012 – 6:03 am

schaeffer

THE FRANCIS SCHAEFFER CENTENNIAL – INVOCATION – PASTOR TONY FELICH

Uploaded by on Feb 3, 2012

Pastor Tony Felich of Redeemer Presbyterian Church in Overland Park, KS gives the invocation to the mini conference event in honor of Francis Schaeffer’s 100th Birthday.

__________________________

This year Francis Schaeffer would have turned 100 on Jan 30, 2012. I remember like yesterday when I first was introduced to his books. I was even more amazed when I first saw his films. I was so influenced by them that I bought every one of his 30 something books and his two film series. Here is a  tribute that I got off the internet from Chuck Colson’s website www.breakpoint.org :

A Brief Evangelical History of Worldview
ruggedcross

By John Stonestreet|Published Date: June 14, 2010

Evangelicals and Worldview (2)

Two Calvinists

David Naugle traces the use of worldview among Christians to the teachings and writings of James Orr (1844-1913) and Abraham Kuyper (1837-1920), and claims that each, having emerged from a Calvinist tradition, utilized the concept of worldview via its widely-accepted use in German philosophy. These two men are the “headwaters” from which emerged a stream of Christian worldview thinkers.

Orr’s influence can be seen in the writings of Gordon Clark (1902-1986) and Carl F.H. Henry (1913-2003), while Kuyper’s influence is seen primarily among reformed thinkers, most prominently Herman Dooyeweerd (1894-1977) and Francis Schaeffer (1912-1984).[i] The influence of these men can be further seen in the writings of others, including Ronald Nash, Albert Wolters, Arthur Holmes, W. Gary Phillips and William E. Brown, Richard Middleton and Brian J. Walsh, Charles Colson, Nancy Pearcey, James Sire, David Noebel, and David Naugle.[ii]

James Orr

When James Orr delivered the Kerr Lecture is 1891, he appropriated the idea of worldview and applied it to Christianity. Although Christianity had been seen holistically by many before him, he was the first to specifically utilize the English translation of weltanschauung which, as already noted, had become a significant concept in German philosophy. Living during the time some had called the “un-Christening of Europe,”[iii] Orr noted that there was a growing confidence in the coherence of the universe and the ability to achieve a synthesis of knowledge about the universe, and that Christianity would stand or fall according to its ability to answer challenges that were comprehensive. Christianity, also, had a “worldview”[iv] in that sense, and Orr asserted that it should be talked about as such.

Further, Orr saw it as the natural tendency of humans to theorize towards a comprehensive view of things, and practically to seek answers to ultimate questions of origin and destiny.[v] Worldviews, to Orr, were human nature. Additionally, Orr believed there were four advantages of thinking of Christianity in this way: (1) it would highlight the differences between Christianity and modernist views; (2) the debate over miracles would be reconfigured from particular miracles to the nature of reality; (3) it would alter the Christian’s approach to other worldviews and the truth that is found in those views; and (4) it would tie the Old and New Testaments together.[vi]

Orr’s influence can be easily traced. The title of Clark’s book A Christian View of Men and Things suggests that he was influenced by Orr’s The Christian View of God and the World, and was even attempting to take Orr’s work further. To Clark, only the Christian worldview could adequately explain the way the world is, offer legitimate meaning and hope, and support the existence of truth that is attainable.[vii] Through Clark’s influence, the language of worldview gained further momentum. For example, Ron Nash, a student and admirer of Clark, utilizes the language of worldview in many of his books and has influenced other students to think along those lines as well.[viii]

More prominent in Orr’s legacy is Carl F. H. Henry, who pointed to the influence of Orr as key to his worldview approach. This is evident in Henry’s masterful God, Revelation and Authority.[ix] Although it would be hard to fully measure the influence of Henry on twentieth century evangelicalism, it can certainly be seen in David Noebel’s contribution to worldview thinking, Understanding the Times: The Collision of Today’s Worldviews.[x]

Abraham Kuyper

Kuyper, in Lectures on Calvinism (the published form of his 1898 Stone Lectures at Princeton University) stated, “Two life systems are wrestling with one another, in mortal combat. This is the struggle in Europe, this is the struggle in America …”[xi] To Kuyper, these two systems were modernism and Christianity, and if modernism were a comprehensive system, then Christianity ought to be conceived of as comprehensive as well. If non-Christian worldviews were marked out across the spectrum of society, so too should Christianity be worked out and applied to every area. When fully applied and compared, Christianity would naturally prove to be the “more brilliant” and “the more capable of taking us to a higher level as a civilization.”[xii]

This approach, Kuyper thought, would be more effective than traditional apologetics, which, “has not advanced us one single step.”[xiii] For Kuyper, the goal was the transformation of all of culture, at every level, to recognize God’s authority. Key to Kuyper’s approach, and legacy, are the following themes: (1) a cosmic understanding of salvation, that grace restore nature as well as souls; (2) the sovereignty of God over all of life and order; (3) the cultural mandate as prior to, and unlocking the meaning of, the great commission; and (4) a spiritual antithesis characterizes the relationships of believers and unbelievers.[xiv]

Kuyper exerted significant influence on future worldview thinkers through the founding of the Free University of Amsterdam, as well as through his considerable success in Dutch politics. This influence continued through the work of Dooyeweerd, who emerged as Kuyper’s heir at Free University and has been called “the most creative and influential philosopher among neo-Calvinists in the 20th century.”[xv]

Dooyeweerd followed up on Kuyper’s concept of worldview early in his career, altered it later in his career, and became a key individual in the academic discussion of worldview. His influence can be especially seen through Calvin College and the Institute for Christian Studies in Toronto, Canada.[xvi] Writers on Christian worldview that have followed in the Kuyperian tradition include Albert Wolters, Arthur Holmes, Richard Middleton and Brian Walsh, Charles Colson, and Nancy Pearcey.

Francis Schaeffer

Still, the one who may have influenced Protestant Evangelicalism more than any other towards worldview thinking is Francis Schaeffer. Schaeffer’s most significant contribution was bringing the concept of Christian worldview out of the academy to popular Christian thought. Through books like How Should We Then Live[xvii], videos, and his L’Abri Study Center, Schaeffer made worldview thinking accessible and applicable to non-academics, demonstrated the broad relevance of Christianity to culture, paved the way for para-church organizations committed to Christian worldview thinking, and influenced the worldview writings of individuals such as Charles Colson and Nancy Pearcey. Naugle traces Schaeffer’s thought back to Kuyper, pointing to Schaeffer’s wide application of Christianity to culture. However, Schaeffer’s varied approach to worldview thinking suggests that his use of the concept went beyond the Kuyperian tradition.

Orr vs. Kuyper

While Orr and Kuyper shared a belief in a common foe (modernism), and though it is believed that Kuyper relied heavily on Orr’s earlier lectures[xviii], their overall approach to worldview differed. Though Orr was clearly a Calvinist, he did not emphasize it as much as Kuyper did, who attempted to understand everything first and foremost in light of the absolute sovereignty of God. Kuyper’s famous line from a speech delivered at the opening of the Free University in Amsterdam, which he founded, reflects his starting point of thinking about Christianity as a worldview, “There is not a square inch in the whole domain of our human existence over which Christ, who is Sovereign over all, does not cry: ‘Mine!’”[xix]

So, while Orr focused on Christianity as a total belief system in contrast with other systems, Kuyper focused on Christianity applied (more specifically Calvinism) compared with modernism applied. For Kuyper, worldview was a notion that offered an apologetic primarily not by comparison with other worldviews, but by allowing it to provide cultural leadership in a wide variety of areas;[xx] and he is well-known for his attempts to actually apply a Christian worldview to diverse areas of culture in The Netherlands through his various roles as scholar, journalist, writer, pastor, and politician. The heritage of the two diverging approaches of Orr and Kuyper can be seen in the different approaches to worldview study today.

Questions for Study or Discussion

  • What do Orr’s and Kuyper’s understanding of worldview have in common? Where do they differ?
  • Why is it essential to keep both of these understandings of worldview in mind as we work to build our on Christian worldview?
  • What are some aspects of contemporary Christian belief that might frustrate our attempt to construct a comprehensive Christian worldview?
  • In what areas of contemporary culture do you think a Christian worldview is most urgently needed?
  • Why does Francis Schaeffer matter so much in the discussion of Christian worldview?

[i]Naugle, Worldview, 5, 6-15, and 16-32. See also, Peter S. Heslam, Creating a Christian Worldview: Abraham Kuyper’s Lectures on Calvinism, 88-95.

[ii]Ronald Nash, Worldviews in Conflict: Choosing Christianity in a World of Ideas (Grand Rapids, Mich.: Zondervan, 1992); Albert Wolters, Creation Regained: Biblical Basics for a Reformational Worldview (Grand Rapids,Mich.:

Eerdman’s, 1985); Arthur Holmes, Contours of a Worldview (Grand Rapids, Mich.: Eerdman’s, 1983); Brown and Phillips, Making Sense of Your World; Richard Middleton and Brian J. Walsh, The Transforming Vision: Shaping a Christian Worldview (Downers Grove, Ill.: InterVarsity Press, 1984); Colson and Pearcey, How Now Shall We Live?; Pearcey, Total Truth; James Sire, The Universe Next Door: A Basic Worldview Catalog, 4th ed. (Downers Grove,

Ill.: InterVarsity Press, 2004); David Noebel, Understanding the Times: The Religious Worldviews of Our Day and the Search for Truth (Eugene, Or.: Harvest House, 1991); David Naugle, Worldview. Many more could be added here, but these are among the more important who reflect a direct influence from Orr, Kuyper, Clark, Henry, Dooeyweerd, and Schaeffer.

[iii]See Naugle, Worldview, 6.

[iv]Orr, A Christian View, 8-9.

[v]Ibid, 6-7.

[vi]See Naugle, Worldview, 11-12.

[vii]Gordon H. Clark, A Christian View of Men and Things, 218.

[viii]Most significant are Worldviews in Conflict and Faith and Reason: Searching for a Rational Faith (Grand Rapids, Mich.: Zondervan, 1968). Nash’s influence can be seen in Phillips and Brown, Making Sense of Your World.

[ix]See Naugle, Worldview, 15.

[x]For example, Noebel, Understanding the Times, 12, 25, 89-90, 166-167.

[xi]Kuyper, Lectures on Calvinism, 11.

[xii]Ibid, 41.

[xiii]Ibid, 11. Cf. Naugle, Worldview, 18-19.

[xiv]Naugle, Worldview, 22-23.

[xv]Naugle, Worldview, 25. See also, Nash, Dooyeweerd and the Amsterdam Philosophy (Grand Rapids,Mich.:

Zondervan, 1962).

[xvi]See Naugle, 25-29; Also, Paul Marshall, Sander Griffioen, Richard J. Mouw, eds. Stained Glass: Worldviews and  Social Science (Lanham, Md.: University Press of America, 1989) and James Sire, Naming the Elephant (Downers Grove,Ill.: InterVarsity Press, 2004).

[xvii]Schaeffer, How Should We Then Live? The Rise and Decline of Western Thought and Culture (Wheaton,Ill.: Crossway, 1983).

[xviii]Heslam, Creating a Christian Worldview, 92-95. Heslam cites the following point made by Kuyper that were initially made by Orr: (1) Christianity and modernism each derived from separate, antithetical “first principles;”

(2) the only Christian defense against modernism is the development of a comprehensive, coherent worldview;

(3) the concept of worldview had bearing on all theoretical thought, not just religion; (4) all true religions possess a worldview of their own; and (5) the purpose of the lecture series itself was to show that Christianity had a definite view on things.

[xix]Kuper, “Sphere Sovereignty.” Quoted in Naugle, Worldview, 16.

[xx]Wolters, “On the Idea of Worldview and Its Relationship to Philosophy” in Stained Glass, 20.

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E P I S O D E 5 How Should We Then Live 5-1 I was impacted by this film series by Francis Schaeffer back in the 1970′s and I wanted to share it with you. Francis Schaeffer noted, “Reformation Did Not Bring Perfection. But gradually on basis of biblical teaching there was a unique improvement. A. […]

Francis Schaeffer’s “How should we then live?” Video and outline of episode 4 “The Reformation” (Schaeffer Sundays)

How Should We Then Live 4-1 I was impacted by this film series by Francis Schaeffer back in the 1970′s and I wanted to share it with you. Schaeffer makes three key points concerning the Reformation: “1. Erasmian Christian humanism rejected by Farel. 2. Bible gives needed answers not only as to how to be right with […]

Francis Schaeffer’s “How should we then live?” Video and outline of episode 3 “The Renaissance”

How Should We Then Live 3-1 I was impacted by this film series by Francis Schaeffer back in the 1970′s and I wanted to share it with you. Schaeffer really shows why we have so many problems today with this excellent episode. He noted, “Could have gone either way—with emphasis on real people living in […]

Francis Schaeffer’s “How should we then live?” Video and outline of episode 2 “The Middle Ages” (Schaeffer Sundays)

How Should We Then Live 2-1 I was impacted by this film series by Francis Schaeffer back in the 1970′s and I wanted to share it with you. Schaeffer points out that during this time period unfortunately we have the “Church’s deviation from early church’s teaching in regard to authority and the approach to God.” […]

Francis Schaeffer’s “How should we then live?” Video and outline of episode 1 “The Roman Age” (Schaeffer Sundays)

How Should We Then Live 1-1 Today I am starting a series that really had a big impact on my life back in the 1970′s when I first saw it. There are ten parts and today is the first. Francis Schaeffer takes a look at Rome and why it fell. It fell because of inward […]

Andy Rooney was an atheist

How Now Shall We LiveClick here to purchase Chuck Colson and Nancy Pearcey’s How Now Shall We Live?, dedicated to Francis Schaeffer.

Click here for a list of Francis Schaeffer’s greatest works, from the Colson Center store!

By Everette Hatcher III | Posted in Francis Schaeffer | Comments (0)

Are other countries passing us by because of the directon liberals are taking us? (Part 25)

December 13, 2012 – 1:11 am

 

These posts are all dealing with issues that President Obama did not help on in his first term. I am hopeful that he will continue to respond to my letters that I have written him and that he will especially reconsider his view on the following import issue which deals with holding down federal spending. Is President Obama going to bankrupt our country by going from 10 trillion to 22 trillion in debt? We better shape up now or other countries will overtake us economically.

If we cut spending and balance our budget and enact pro-market reforms then our economy would boom too.  

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Those Sneaky Canadians Are Overtaking the United States

May 30, 2012 by Dan Mitchell

I’m not quite ready to trade places with Canada, but it may just be a matter of time. Like Germany and Sweden, they seem to be slowly but surely trying to move in the right direction.

I’ve already commented on good Canadian fiscal policy (including a much-needed lesson for Paul Krugman), and I’ve also praised our northern neighbors for privatizing their air traffic control system and opposing global bank taxes.

But I’ve just been skating along the surface. My Cato colleague Chris Edwards (a Canadian transplant) has just written up a report with some of the key details.

Two decades ago Canada suffered a deep recession and teetered on the brink of a debt crisis caused by rising government spending. The Wall Street Journalsaid that growing debt was making Canada an “honorary member of the third world” with the “northern peso” as its currency. But Canada reversed course and cut spending, balanced its budget, and enacted various pro-market reforms. The economy boomed, unemployment plunged, and the formerly weak Canadian dollar soared to reach parity with the U.S. dollar. …[In] the early 1990s combined federal, provincial, and local spending peaked at more than half of gross domestic product (GDP). In the 1993 elections, Prime Minister Jean Chretien’s Liberals gained power promising fiscal restraint, but this was the party of Trudeau, and so major reforms seemed unlikely. In the first Liberal budget in 1994, Finance Minister Paul Martin provided some modest spending restraint. But in his second budget in 1995, he began serious cutting. In just two years, total noninterest spending fell by 10 percent, which would be like the U.S. Congress chopping $340 billion from this year’s noninterest federal spending of $3.4 trillion. When U.S. policymakers talk about “cutting” spending, they usually mean reducing spending growth rates, but the Canadians actually spent less when they reformed their budget in the 1990s. The Canadian government cut defense, unemployment insurance, transportation, business subsidies, aid to provincial governments, and many other items. After the first two years of cuts, the government held spending growth to about 2 percent for the next three years. With this restraint, federal spending as a share of GDP plunged from 22 percent in 1995 to 17 percent by 2000. The spending share kept falling during the 2000s to reach 15 percent by 2006, which was the lowest level since the 1940s. …The spending reforms of the 1990s allowed the Canadian federal government to balance its budget every year between 1998 and 2008. The government’s debt plunged from 68 percent of GDP in 1995 to just 34 percent today.

Total government spending, including sub-national units such as states and provinces, is still slightly higher in Canada than in the United States. But I suspect that will change within the next five years.

Not surprisingly, good spending policy leads to good tax policy, as Chris explains.

a slimmed-down Canadian government under the Liberals enjoyed large budget surpluses and pursued an array of tax cuts. The Conservatives continued cutting after they assumed power in 2006. During the 2000s the top capital gains tax rate was cut to 14.5 percent, special “capital taxes” on businesses were mainly abolished, income taxes were trimmed, and income tax brackets were fully indexed for inflation. Another reform was the creation of Tax-Free Savings Accounts, which are like Roth IRAs in the United States, except more flexible. The most dramatic cuts were to corporate taxes. The federal corporate tax rate was cut from 29 percent in 2000 to 15 percent in 2012. Most provinces also trimmed their corporate taxes, so that the overall average rate in Canada is just 27 percent today. By contrast, the average U.S. federal-state rate is 40 percent. …Canada’s federal corporate tax rate has been cut from 38 percent in the early 1980s to just 15 percent today. Despite the much lower rate, tax revenues have not declined. Indeed, corporate tax revenues averaged 2.1 percent of GDP during the 1980s and a slightly higher 2.3 percent during the 2000s.

The Laffer Curve effect of higher tax revenue shouldn’t be surprising, though American policymakers still operate in a fantasy world where taxes are assumed to have no impact on the economy and no impact on taxable income.

But that’s a secondary point. The main lesson of this research by Chris is that it is both possible and desirable to shrink the burden of government spending.

And it’s not just Canada that has done the right thing. This video outlines past reforms in Ireland, Slovakia, and New Zealand as well.

P.S. Other than the cold weather, another reason why I don’t quite yet want to trade places with Canada is the government-run healthcare system. Right now, high-ranking politicians from the frozen wastelands can escape to America when they fall ill. If we copy Canada (and we’re already pretty far down that path), then where will we be able to go to get high-quality and cutting-edge care?

P.P.S. The Canadians aren’t know for having a sense of humor, but the person who wrote this parody about emigrating American leftists definitely has a good sense of humor.

By Everette Hatcher III | Posted in Cato Institute, President Obama | Comments (0)

Flat Tax would lower the incentive to avoid paying taxes

December 12, 2012 – 8:20 am

The Flat Tax would lower the incentive to avoid paying taxes to the government. Then it seems that those who complain about all the  Washington influence-peddling and lobbying  should support the Flat Tax. Max Brantley of the Arkansas Times complains probably the most but there is no way he would favor trying to lesson the problem with a Flat Tax.

I’ve been very critical of Obama’s class-warfare ideology because it leads to bad fiscal policy. But perhaps it is time to give some attention to other arguments against high tax rates.

Robert Samuelson, a columnist for the Washington Post, has a very important insight about tax rates and sleaze in Washington.

His column is mostly about Obama’s anti-tax reform agenda, but it includes this very important passage.

…many politicians support tax breaks for favored groups (the elderly, the poor, small business) and causes (homeownership, attending college, “green” industries). This enhances their power. The man who really pronounced the death sentence for the Tax Reform Act of 1986 was Bill Clinton, who increased the top rate to 39.6 percent rather than broadening the base. As the top rate rose, so did the value of generating new tax breaks. Ironically, many of the people who complain the loudest about Washington influence-peddling and lobbying are the same people who support higher tax rates, which stimulate more influence-peddling and lobbying.

The last sentence is key. Higher tax rates are good news for the politicians, interest groups, bureaucrats, and lobbyists that dominate Washington.

Here’s a simple example. Let’s pretend we have a modest tax rate of 20 percent. Now imagine you are part of an industry with $200 million in profits and you want a special tax break. How much are you willing to pay to get that loophole?

Well, with a 20 percent tax, the most you can save (assuming the loophole is huge and you wipe out all your tax liability) is $40 million.

So how much would you spend on lobbyists, campaign contributions, etc, in order to get that loophole? That’s hard to answer, because it would require some estimate of the probability of success. But one thing we can safely assume is that the industry would never spend more than $40 million.

But let’s now assume you live in a world with 50 percent tax rates. Does that change the incentive for influence peddling in Washington? Of course it does. The industry’s tax bill is now $100 million, so it now has an incentive to spend up to that amount to get special treatment.

So now let’s consider a couple of additional hypothetical questions.

  • First, imagine you’re a lobbyist. Do you think you will get more business if tax rates are high, or if tax rates are low?
  • Second, imagine you are a politician. Do you think you will get more campaign contributions if tax rates are high, or if tax rates are low?

The answers are obvious, and so are the implications. Yes, higher tax rates are bad for growth and competitiveness. And, yes, they are unfair and discriminatory.

But they also foment and encourage sleaze in D.C., and that’s something that honest leftists should hate as much as the rest of us.

For more information, here’s my video on the link between big government and corruption, including a section on how a loophole-ridden tax system benefits Washington insiders.

The Flat Tax: How it Works and Why it is Good for America

Both videos have good information (at least I like to think), but kudos to Samuelson for drawing an important link between high tax rates and corruption.

P.S. Robert Samuelson is hard to pin down on the philosophical spectrum. He’s written very good columns denouncing Obama’s manipulation of welfare statistics and criticizing the President’s flirtation with the value-added tax. But he’s also had a couple of columns where he identifies a very real problem, but fails to reach the right conclusion, including this piece that should have been an argument for Austrian economics and this piece on health care inefficiency that should have pinned the blame on third-party payer.

By Everette Hatcher III | Posted in President Obama, spending out of control, Taxes | Comments (0)

John Boehner going to stand up to the President?

December 12, 2012 – 8:17 am

How Raising Taxes Will Not Balance the Budget: More Evidence

Published on Nov 15, 2012

Although it may seem counterintuitive, raising taxes on the rich does not actually increase the amount of taxes the government collects. How could this possibly be the case? According to Professor Antony Davies, it is because the many loopholes in federal income taxes, capital gains taxes, and many other taxes, enable people to partially avoid these taxes. Perhaps instead of discussing how to raise tax revenues, we should spend our energy simplifying the tax code. This would make it more difficult for people to avoid taxes and, Davies says, “The less time and money we spend trying to work around a complex tax code, the more time and money we will have available to put to more productive uses.”

Do you think that the tax code is too complicated? Let us know in the comments!

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I have done my part by writing letters over and over and over to John Boehner begging him to hold the line on spending and to not give in to President Obama on tax increases. I doubt seriously that he will do that. Here is an article below that shares my same concerns.

Boehner’s Blunder

by Michael D. Tanner

Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on November 14, 2012

This article appeared on National Review (Online)on November 14, 2012.

Well, that didn’t take long.

They hadn’t even finished counting the ballots in Florida when House speaker John Boehner indicated that Republicans were preparing to surrender on issues ranging from taxes to health-care reform.

With regard to taxes, Boehner signaled that he was once again open to a “grand bargain” to avoid the looming fiscal cliff. While he kept an increase in tax rates off the table for now, Boehner said that he was open to “additional revenue” as part of a deal. Such additional revenue could, of course, take many forms, such as closing loopholes, raising fees, or counting on increased economic growth. But by preemptively conceding on revenue, Speaker Boehner takes the focus off the need to cut spending.

Giving in on key Republican principles such as taxes is no way to rebuild the party.

Speaker Boehner correctly noted that everyone agrees we can’t keep spending more than we take in. But that implies that the problem is simply the difference between what comes in and what goes out. It’s not.

The Congressional Budget Office projects that, under current policy, federal spending will reach 46 percent of GDP by mid-century — even if we never add another new government program. True, a substantial portion of that spending will be interest on the federal debt. Theoretically, therefore, if taxes were increased enough to cover spending and close the deficit, adding no additional debt, we’d have far lower interest payments, meaning that total levels of government spending would be lower in the future. Lower, but not that low: Even if one assumes that the government accumulated no additional debt beyond the $16.2 trillion it currently owes, federal government spending would still approach 30 percent of GDP by 2050. Throw in state and local spending, and government at all levels would consume roughly half of everything produced in this country. We might have no deficit, but we would have both higher government spending and a bigger tax burden than Greece has today.

Boehner’s willingness to give in so easily on revenues makes it less likely that there will be real spending cuts as part of any deal. We’re likely to get more of the sort of smoke-and-mirrors measures that the president has already proposed, such as reliance on phantom savings from ending the wars in Iraq and Afghanistan, double-counting cuts that were already included in last year’s budget agreement, and the perennial promises to eliminate “fraud, waste, and abuse.” Just look at how illusory the alleged spending cuts in last year’s debt-ceiling deal turned out to be: In the twelve months following that deal, federal spending actually increased by 3.6 percent, an average of $11 billion more every month.

At a minimum, Speaker Boehner seems to have given up any leverage that he might have had to demand the entitlement reforms necessary for any long-term spending restraint. Having conceded on taxes, what does he have left to trade?

For that matter, even his line in the sand about tax rates seems unlikely to hold. Having already surrendered to the idea of tax hikes, the debate becomes one not about whether to raise taxes but about which taxes or whose taxes to increase.

Similarly, the speaker sent conflicting signals on whether or not Republicans will continue to pursue repeal of Obamacare. Boehner first told Diane Sawyer that “Obamacare is the law of the land,” and that Republicans will no longer devote political capital to repealing it, while maintaining that there “may be parts of it that we believe need to be changed.” Later he walked those comments back in a tweet, saying that full repeal remained a Republican goal.

If nothing else, Boehner’s health-care remarks muddy the party’s position on a crucial issue.

It is not as though Obamacare has become significantly more popular. Exit polls showed that even an electorate that reelected President Obama opposed the new health-care law by 49 to 44 percent. And many of the law’s most damaging and unpopular provisions have not even kicked in yet. Next year, for instance, will see the implementation of many of its new taxes, including the medical-device tax, a Medicare payroll-tax hike for those making over $200,000, and a new surtax on investment income for the same group. And, of course, in 2014, just in time for the midterm elections, Americans will be hit by the law’s individual and employer mandates.

Obviously, with the Democrats in control of the Senate and President Obama reelected, Obamacare was not going to be repealed this year. But that doesn’t mean that Republicans should stop fighting it. House Republicans still have the power of the purse, and state governments have been entrusted with the law’s implementation. At least ten states have refused to set up the insurance exchanges that the law stipulates. (Governors Bob McDonell of Virginia and Sam Brownback of Kansas are the latest to announce that their states will not do so.) At least another eight states simply will not be able to set one up before the law’s deadline of January 1, 2014. That means that the Obama administration will have to seek additional funding in order to operate federal exchanges in those states. House Republicans should refuse to appropriate any such funds and should block attempts by HHS to shift funds appropriated for other purposes.

But can Americans count on House Republicans to hold the line in the wake of Boehner’s comments?

Republicans certainly took a drubbing in this year’s elections. Rethinking and repositioning may well be necessary, especially on immigration and social-issues messaging. But let us not forget that Republicans are only two years removed from a historic landslide victory won in part by opposition to government spending, taxes, and Obamacare. And, despite the Democrats’ best attempts to paint House Republicans as plutocrat-loving, grandma-hating obstructionists, the GOP caucus lost a net of only four seats. Indeed, the Tea Party Caucus, for all the criticism it received, lost only three seats.

John Boehner knows that the Republican brand could use some refurbishment, but surrendering on taxes, spending, and health care is hardly an auspicious way to begin the task.

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John Boehner in Little Rock, I wish he would propose real spending cuts!!!!

Max Brantley of the Arkansas Times noted: House Speaker John Boehner was spotted in Little Rock yesterday — lunch at Whole Hog Cafe and at Cajun’s Wharf during the evening hours. My spin on John Boehner is very simple. He needs to be brave enough to join those conservatives in the House that really do […]

 

By Everette Hatcher III | Posted in Cato Institute, President Obama, spending out of control, Taxes | Comments (0)

Remembering Francis Schaeffer at 100 (Part 12)

December 12, 2012 – 8:00 am

Dr. Francis Schaeffer – The Naturalistic, Materialistic, World View

This year Francis Schaeffer would have turned 100 on Jan 30, 2012. I remember like yesterday when I first was introduced to his books. I was even more amazed when I first saw his films. I was so influenced by them that I bought every one of his 30 something books and his two film series. Here is an article that I got off the internet that quotes Schaeffer and it comes from Chuck Colson’s website www.breakpoint.org :

Piece By Piece
By Chuck Colson|Published Date: July 25, 2011

Taking Apart a Worldview

fence-sky1

First published in February, 1998, this BreakPoint commentary reminds us of the utter necessity of confronting and dealing with sin.

How important is it to understand another person’s worldview—someone’s conception of the world, of human life, of reality? It took a former communist to remind me of the answer: It’s absolutely essential.

A few months ago I traveled to Eastern Europe to meet with Prison Fellowship volunteers in a number of countries. One stop was Bulgaria. At the prison in Sofia, we dedicated a prison hospital, provided by Prison Fellowship Holland, and a new prison chapel that had been built by Bulgarian Christians.

It was a glorious occasion. Bulgaria’s national press corps were in attendance, along with the minister of justice, a former Communist and an atheist.

During the dedication ceremonies I told the crowd that crime was a moral problem. Thus, the chapel was vital in dealing with crime, because it would address the restoration of souls.

The minister of justice, who had stood indifferently through most of the proceedings, now stared intently at me as I spoke. Later, he invited me to drop by his office. A remarkable conversation followed.

“Mr. Colson,” the justice minister said, “you speak of crime as a moral problem. What do you mean? Is that a sociological statement?”

I told him that crime was caused by sin—by people choosing to do wrong. He looked bewildered and shook his head. “Oh, no,” he said. “Crime is caused by economic factors.”

At that moment I realized I was face to face with an absolutely alien worldview. As a Communist, this man had been steeped in dialectical materialism—the philosophical underpinnings of Marxism. That is, that economics determines how we behave. That’s the way he saw reality and life.

I realized that before I could even begin to witness to this man, I would have to engage in what the late Francis Schaeffer called “pre-evangelism.” So during the next 90 minutes, I took apart this man’s most basic suppositions, piece by piece. I talked about human sin—the evidence of it in the tragedies of the twentieth century. I talked about the fact that people are motivated by spiritual forces, not by economics. I talked about the relationship of morality to crime.

It was fascinating to watch his expression change as I challenged his view of human nature and of reality. Finally-after an hour and 20 minutes—I was able to openly share what Jesus Christ had done in my life. At that point the minister could understand it; it was as if a dark cloud had lifted.

My experience in Bulgaria is a metaphor for what Christians face—not only in foreign lands but here at home, as well. You see, if people believe there is no such thing as sin, then talk of a Savior makes no sense. If they believe that man is in charge of his destiny—that he can create utopia—then to their minds they make the law, and there is no such thing as a law above the law.

That Bulgarian bureaucrat reminds us that what stands between many people and the Lord is a worldview that cannot accommodate the essential truths of the faith. Until Christians understand this, it will be next to impossible for us to communicate with the modern, secular mind.

Because the man, whether in Bulgaria or America, who does not believe in sin will not believe in a Savior.

BookYou should get a copy of Cornelius Plantinga’s book, Not the Way It’s Supposed to Be, from our online store. Dr. Plantinga can help you to understand better the devastating effects of sin. You should also read the article, “Slaves to Sin,” by T. M. Moore.
By Everette Hatcher III | Posted in Francis Schaeffer | Tagged , , , , , , , , , , , | Comments (0)