The Wall Street Journalopined this morning about Citadel’s move.
The first step to recovery is supposed to be admitting you have a problem. But Illinois Gov. J.B. Pritzker still won’t, even after billionaire Ken Griffin on Thursday said he’s moving his Citadel hedge fund and securities trading firm to Miami from Chicago.…Meantime, Democrats in Springfield continue to threaten businesses and citizens with higher taxes… It’s no wonder so many companies and people are leaving, and mostly to low-tax states. …In 2020, $2.4 billion in net adjusted gross income moved to Florida from Illinois, about $298,000 per tax filer. …Mr. Griffin has spent tens of millions of his personal fortune trying to rescue Illinois from bad progressive governance. Maybe he figures it’s time to cut his losses.
Other (former) Illinois residents cut their losses last decade.
Scott Shackford of Reason shared grim data at the end of 2020 about the ongoing exodus from Illinois.
For the seventh year in a row, census figures show residents moving out of Illinois in significant numbers. …Perhaps demanding that your excessively taxed residents give the government even more money is not the best way to keep those residents in your state… Over the course of the last decade, Illinois lost more than a quarter-million people…not even California…has seen Illinois’ population loss. …Government leaders have responded not with better fiscal management (the state’s powerful unions blocked pension reforms), but with more taxes and fees, even as residents leave.
The bottom line is that Illinois is currently losing people and businesses.
Just as it lost people and businesses last decade.
And you can see from this map that taxpayers also were fleeing the state earlier this century.
I’m guessing the state’s hypocritical governorprobably thinks this is a good thing because the people who left probably didn’t vote for tax-and-spend politicians.
But now I’ll share some good news. No matter how bad California gets, the Golden State probably won’t have to worry about people and businesses fleeing to Illinois.
But the state’s productive people have a different point of view. More and more of them have been escaping.
And they are now being joined by the state’s most-famous company, as Matt Paprocki of the Illinois Policy Institute explains in a column for the Washington Post.
When Boeing announced last month that it was moving its headquarters from Chicago to Arlington, Va., it sent shudders through the Illinois business community and state capital.But last week, when the heavy-equipment manufacturer Caterpillar said it was moving its headquarters to Texas, it felt more like a bulldozer ramming into the news. …If you’re an Illinois business owner or resident, as I am, the economics of staying are tough and the enticements to move away are many. …According to the U.S. Census Bureau, last year the state had the third-largest loss of residents due to domestic migration in the nation (-122,460), trailing only California and New York.
It’s easy to understand why people and businesses are leaving.
In 2017, Illinois lawmakers raised the personal income tax rate to 4.95 percent, from 3.75 percent, and hiked the corporate rate to 7 percent, from 5.25 percent. When J.B. Pritzker took office as governor in 2019, he passed another 24 tax and fee hikes costing taxpayers over $5 billion. …With 278,475 regulatory restrictions and requirements — double the national average — Illinois has the third most heavily regulated environment in the country. …Illinois owes over $139 billion in state pension debt as of last year, and local governments owe about $75 billion, which is the primary driver for Illinois’ spiraling property taxes, second-highest in the nation.
Mr. Paprocki offers all sorts of suggestions for reform, including a spending cap.
But the chances of pro-growth reform are effectively zero. The governor is a hard-core leftist (as well as a hypocrite) and the state legislature is controlled by government employee unions.
As the chief financial officer of the nation’s second-largest state, even I have found it hard to get a handle on how much governments are spending, and how much debt they’re taking on. Every level of government is piling up incredible bills. And they’re coming due, whether we like it or not. Even in low-tax Texas, property taxes have risen three times faster than the inflation rate and four times faster than our population growth since 1992. Our local governments, meanwhile, more than doubled their debt load in the last decade, to more than $7,500 in debt for every man, woman and child in the state. In Houston alone, city-employee pension plans are facing an unfunded liability of $2.4 billion. But too many taxpayers aren’t given the information they need to make informed decisions when they vote debt issues. Recently I spent several months holding about 40 town-hall meetings with Texans across our state. Each time, I asked the attendees if they could tell me how much debt their local governments are carrying. Not a single person in a single town had this information.
In other words, taxpayers need to be eternally vigilant, regardless of where they live. Otherwise the corrupt rectangle of politicians, bureaucrats, lobbyists, and interest groups will figure out hidden ways of using the political process to obtain unearned wealth.
But now I’ll share some good news. No matter how bad California gets, the Golden State probably won’t have to worry about people and businesses fleeing to Illinois.
But the state’s productive people have a different point of view. More and more of them have been escaping.
And they are now being joined by the state’s most-famous company, as Matt Paprocki of the Illinois Policy Institute explains in a column for the Washington Post.
When Boeing announced last month that it was moving its headquarters from Chicago to Arlington, Va., it sent shudders through the Illinois business community and state capital.But last week, when the heavy-equipment manufacturer Caterpillar said it was moving its headquarters to Texas, it felt more like a bulldozer ramming into the news. …If you’re an Illinois business owner or resident, as I am, the economics of staying are tough and the enticements to move away are many. …According to the U.S. Census Bureau, last year the state had the third-largest loss of residents due to domestic migration in the nation (-122,460), trailing only California and New York.
It’s easy to understand why people and businesses are leaving.
In 2017, Illinois lawmakers raised the personal income tax rate to 4.95 percent, from 3.75 percent, and hiked the corporate rate to 7 percent, from 5.25 percent. When J.B. Pritzker took office as governor in 2019, he passed another 24 tax and fee hikes costing taxpayers over $5 billion. …With 278,475 regulatory restrictions and requirements — double the national average — Illinois has the third most heavily regulated environment in the country. …Illinois owes over $139 billion in state pension debt as of last year, and local governments owe about $75 billion, which is the primary driver for Illinois’ spiraling property taxes, second-highest in the nation.
Mr. Paprocki offers all sorts of suggestions for reform, including a spending cap.
But the chances of pro-growth reform are effectively zero. The governor is a hard-core leftist (as well as a hypocrite) and the state legislature is controlled by government employee unions.
As the chief financial officer of the nation’s second-largest state, even I have found it hard to get a handle on how much governments are spending, and how much debt they’re taking on. Every level of government is piling up incredible bills. And they’re coming due, whether we like it or not. Even in low-tax Texas, property taxes have risen three times faster than the inflation rate and four times faster than our population growth since 1992. Our local governments, meanwhile, more than doubled their debt load in the last decade, to more than $7,500 in debt for every man, woman and child in the state. In Houston alone, city-employee pension plans are facing an unfunded liability of $2.4 billion. But too many taxpayers aren’t given the information they need to make informed decisions when they vote debt issues. Recently I spent several months holding about 40 town-hall meetings with Texans across our state. Each time, I asked the attendees if they could tell me how much debt their local governments are carrying. Not a single person in a single town had this information.
In other words, taxpayers need to be eternally vigilant, regardless of where they live. Otherwise the corrupt rectangle of politicians, bureaucrats, lobbyists, and interest groups will figure out hidden ways of using the political process to obtain unearned wealth.
Regarding my comments, it’s no surprise that I have a new reason to dislike Justin Trudeau. He’s a typical, empty-suit, posturing politician.
But the more relevant point from the discussion is that there has been a huge increase in gun ownership in the United States in recent decades. And that increase in gun ownership has coincided with a big drop in violent crime.
You could argue that crime has dropped becausemore law-abiding people are now armed.
There certainly is a case to be made for that point of view. But as I said in the discussion, I think demographics deserve most of the credit.
I’m certainly not an expert on that topic, but I think we can safely conclude it was a failure since writers for both the New York Times and the Washington Post admit it hasn’t been successful (and the same is true for New Zealand).
Here’s the bottom line: criminals will get guns no matter how much gun control politicians impose on a nation (just like people got booze during prohibition and they get illegal drugs today).
So the only effect of buybacks, bans, and other anti-gun policies is that bad guys will be better-armed than their victims.
In a presumably futile effort to change their minds by learning how they think, I periodically try to figure out the left-wing mind.
Why, for instance, do some people believe in Keynesian economics, when it is premised on the fanciful notion that you can increase “spending power” by taking money out of the economy’s left pocket and putting it in the economy’s right pocket?
But I’m getting off track. I don’t want to get too serious because the purpose of this post is to share this satirical look at the how leftists rationalize their anti-gun biases.
Let’s take a look at two cities that are quite similar in terms of demographics and income. But they have very different murder rates. Your job is to pretend you’re a leftist and come up with an explanation.
To be fair, we can’t rule out cold weather as a possible explanation given this limited set of data.
Make your own Gun Free Zone
For what it’s worth, however, scholars who actually do real research, like David Kopel and John Lott, reach different conclusions.
Let’s begin with a good jab at one of the anti-Second Amendment groups.
But remember the serious point. If you’re a bad guy and know that a potential victim is sure to be unarmed, does that make you happy or sad?
I realize that an anti-gun zealot will respond by arguing that they want a world where the thugs and crooks also will be disarmed, but how likely is it that such people will turn in their weapons? In any event, most criminals are young men and potential victims need guns to compensate for the inability to match the physical strength of their attackers.
Next let’s look at a poster showing the kind of instructions that statists such as Mayor Bloomberg should post in public places.
These clowns expect us to have blind faith in the ability of public authorities, but the odds of a cop being immediately available when trouble strikes are almost nonexistent.
Here’s a poster that captures the blind naiveté of anti-gun activists. I don’t think I need to add any commentary.
Last but not least, here’s a sign that all anti-gun leftists – assuming they have the courage to publicly celebrate their beliefs – should post outside their homes.
If you enjoy these posters, you can view previous editions here, here, here, here, and here.
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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
And that’s just a partial list. I’m not asserting that markets produce perfect results. Indeed, markets are a never-ending process of creative destruction.
But what I am stating is that intervention by politicians and bureaucrats almost always leads to bad outcomes.
So you can imagine my angst and disappointment at this recent polling data from Echelon Insights. A plurality thinks the government should “do more.”
I’m tempted to speculate whether 47 percent of Americans are morons.
But let’s take the high road and simply dig into the numbers. Whenever I see polling data, I always check whether the question is properly worded.
Is there any bias? Does the question make sense?
Sadly, I think the above question is relatively straightforward. If the poll has asked a stand-alone question about whether the government should do more, that might have been ambiguous.
But when the poll also gives people the option of answering that the government is doing “too many things,” then it is quite clear that “do more” means bigger government.
In other words, 47 percent of people are…well, let’s just say confused.
P.S. I can’t resist sharing one other result from the Echelon Insight poll.
Here’s an example of a poll question generating good results (people want more energy production and a smaller burden of government spending), but for illogical reasons.
The problem with this question is that rising prices are caused by bad monetary policy and the only cure is to change monetary policy.
Yet respondents were not given that option.
They may not have given the right answer if the question was worded better, but they never got the chance (I also made this point when looking at different polling data two months ago).
Tesla founder Elon Musk blasted the “trickery” of President Joe Biden’s spending bill, channeling preeminent free-market economist Milton Friedman.
Musk, the world’s wealthiest person, posted an analysis of the Democratic spending legislation that found that by 2050, the national debt would increase by nearly 25%and gross domestic product would fall by nearly 3% should the plan be implemented with certain temporary provisions made permanent.
“There is a lot of accounting trickery in this bill that isn’t being disclosed to the public,” Musk told his 66 million Twitter followers on Wednesday.
“Nothing is more permanent than a ‘temporary’ government program,” the billionaire added, which is an almost exact word-for-word quote from Friedman, who is known for being a major proponent of free-market capitalism and one of the leaders of the Chicago school of economics.
The Democratic bill, which many in the party claim is fully paid for, is chock-full of spending provisions that have early sunsets and drive down the headline price of the agenda, a tactic that Republicans and certain outside groups have characterized as gimmickry. Should the legislation pass, Democrats would likely seek to make those early sunsets permanent, thus increasing the bill’s actual cost by a large margin.
“In an alternative, illustrative scenario in which all temporary provisions in [the package] are made permanent, spending would instead total $4.6 trillion over the 10-year budget window,” the report reads. “In this scenario, by 2050 federal debt increase by 24.4 percent and GDP would fall by 2.9 percent relative to current law.”
This week, Musk also addressed the Democratic spending legislation during an interview with the Wall Street Journal. Musk said he thinks it might be better if the legislation doesn’t end up getting passed and cited the ballooning federal deficit.
During the interview, Musk said he is not an “extreme libertarian” but does think that the United States should minimize the role of the government. Musk also bucked the notion of federal subsidies, even for the electric vehicles that his company is known for.
“It does not make sense to take the job of capital allocation away from people who have demonstrated great skill at capital allocation and give it to an entity that has demonstrated very poor skill in capital allocation, which is the government,” Musk said, invoking libertarian ideals.
“The government is simply the biggest corporation, with a monopoly on violence, and where you have no recourse,” he said, referencing renowned sociologist Max Weber.
Milton Friedman On Charlie Rose (Part One)
The late Milton Friedman discusses economics and otherwise with Charlie Rose.
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Milton Friedman: Life and ideas – Part 01
Milton Friedman: Life and ideas
A brief biography of Milton Friedman
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Stossel – “Free to Choose” (Milton Friedman) 1/6
6-10-10. pt.1 of 6. Stossel discusses Milton Friedman’s 1980 book, “Free to Choose”, which was smuggled in and read widely in Eastern Europe during the Cold War by many countries under Soviet rule. Read and admired the world over by the likes of Margaret Thatcher and Ronald Reagan, this book served as the inspiration for many of the Soviet sattellite countries’ economies once they achieved freedom after the fall of the Soviet Union.
Milton Friedman famously noted that, “Nothing is so permanent as a temporary government program”and Ronald Reagan sagely observed that “a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”
Two great Americans
They’re both right, but they should have included the other half of the fiscal equation. Repealing a tax, even a “temporary tax,” is just as difficult as getting rid of wasteful spending.
Simply stated, once politicians get access to a source of additional revenue, it’s feeding time at the zoo and good luck getting them to give the money back. Here’s a sobering example from Philadelphia.
Skeptics say there’s no such thing as a “temporary” tax. Like the two-year property tax increase City Council passed in 2010 that, lo and behold, is still with us. Or another dreaded levy: the wage tax. It was passed in 1939 as a short-term fix for the city’s finances, but succeeding generations have nonetheless been forced to accept its bite in their paychecks. The latest tax under consideration for immortality is the 1 percent sales-tax increase the state allowed Philadelphia to impose in 2009 as a bridge through the recession.The increase – which raised the tax on most goods and services in Philadelphia from 7 percent to 8 percent – is slated to expire next June. City and state leaders are now talking about making the increase permanent, with the extra money being put toward one or both of the city’s greatest needs: the struggling School District and the vastly underfunded public employee pension fund.
The bulk of that excerpt is a straightforward recitation of how temporary tax hikes become permanent tax hikes, but I have to object to the final sentence. The “city’s greatest needs” are replacing the failed government education monopoly with school choice and reducing the excessive pensions for over-compensated government bureaucrats – such as the city’s former “managing director” (whatever that is), Camille Cates Barnett.
Joe Grace, director of public policy at the Greater Philadelphia Chamber of Commerce, said, “We have not seen any evidence that extending the 1 percent is going to have any negative impact on the local businesses.” The chamber is also backing a $2-a-pack cigarette tax dedicated to the schools. “Our belief is the School District needs resources,” Grace said. “We’re working, along with many others, to close the school-funding gap, really by any means necessary.”
So Mr. Grace thinks more funding for a failed education bureaucracy should be achieved by “any means necessary.” Well, I think a 100 percent tax rate on Mr. Grace should be at the top of the list.
Heck, if France can tax at 100 percent, then so can the City of Philadelphia, and Mr. Grace is a deserving recipient of such a levy.
But there are some opponents of the tax, though they’re not exactly libertarian heroes.
…members of the nearly all-Democratic Philadelphia delegation have raised concerns about using the 1 percent to help fund the schools because it lets the state off the hook for its share of education funding. Danilo Burgos, president of the Dominican Grocers Association, argued that giving sales-tax revenue to the schools was “a Band-Aid.” The state, which has control of the city’s schools, should be responsible for devising “a real solution for our schools.”
In other words, they want more money to waste, but they want to take it from people in the rest of the state.
Sort of reminds me of what the great Frederic Bastiat wrote more than 150 years ago, “The state is that great fiction by which everyone tries to live at the expense of everyone else.”
Related posts:Milton Friedman’s “Free to Choose” film transcripts and videos here on http://www.thedailyhatch.org
I have many posts on my blog that include both the transcript and videos of Milton Friedman’s film series “Free to Choose” and here are the episodes that I have posted.
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Here are the posts and you can find the links in order below this.
The Power of the Market from 1990
The Failure of Socialism from 1990
The Anatomy of a Crisis from 1980
What is wrong with our schools? from 1980
Created Equal from 1980
From Cradle to Grave from 1980
The Power of the Market 1980
Debate on Inflation from 1980
Milton Friedman is the short one!!!
Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1
Milton Friedman The Power of the Market 5-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 4-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 3-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 2-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman The Power of the Market 1-5 How can we have personal freedom without economic freedom? That is why I don’t understand why socialists who value individual freedoms want to take away our economic freedoms. I wanted to share this info below with you from Milton Friedman who has influenced me greatly over the […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. Abstract: Ronald Reagan introduces this program, and traces a line from Adam Smith’s “The Wealth of […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. Abstract: Ronald Reagan introduces this program, and traces a line from Adam Smith’s “The Wealth of […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. Abstract: Ronald Reagan introduces this program, and traces a line from Adam Smith’s “The Wealth of […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. Abstract: Ronald Reagan introduces this program, and traces a line from Adam Smith’s “The Wealth of […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]
TEMIN: We don’t think the big capital arose before the government did? VON HOFFMAN: Listen, what are we doing here? I mean __ defending big government is like defending death and taxes. When was the last time you met anybody that was in favor of big government? FRIEDMAN: Today, today I met Bob Lekachman, I […]
worked pretty well for a whole generation. Now anything that works well for a whole generation isn’t entirely bad. From the fact __ from that fact, and the undeniable fact that things are working poorly now, are we to conclude that the Keynesian sort of mixed regulation was wrong __ FRIEDMAN: Yes. LEKACHMAN: __ or […]
MCKENZIE: Ah, well, that’s not on our agenda actually. (Laughter) VOICE OFF SCREEN: Why not? MCKENZIE: I boldly repeat the question, though, the expectation having been __ having been raised in the public mind, can you reverse this process where government is expected to produce the happy result? LEKACHMAN: Oh, no way. And it would […]
The massive growth of central government that started after the depression has continued ever since. If anything, it has even speeded up in recent years. Each year there are more buildings in Washington occupied by more bureaucrats administering more laws. The Great Depression persuaded the public that private enterprise was a fundamentally unstable system. That […]
Worse still, America’s depression was to become worldwide because of what lies behind these doors. This is the vault of the Federal Reserve Bank of New York. Inside is the largest horde of gold in the world. Because the world was on a gold standard in 1929, these vaults, where the U.S. gold was stored, […]
George Eccles: Well, then we called all our employees together. And we told them to be at the bank at their place at 8:00 a.m. and just act as if nothing was happening, just have a smile on their face, if they could, and me too. And we have four savings windows and we […]
Milton Friedman’s Free to Choose (1980), episode 3 – Anatomy of a Crisis. part 1 FREE TO CHOOSE: Anatomy of Crisis Friedman Delancy Street in New York’s lower east side, hardly one of the city’s best known sites, yet what happened in this street nearly 50 years ago continues to effect all of us today. […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 6 of 6. Volume 6 – What’s Wrong with our Schools Transcript: FRIEDMAN: But I personally think it’s a good thing. But I don’t see that any reason whatsoever why I shouldn’t have been required […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 5 of 6. Volume 6 – What’s Wrong with our Schools Transcript: Are your voucher schools going to accept these tough children? COONS: You bet they are. (Several talking at once.) COONS: May I answer […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 4 of 6. Volume 6 – What’s Wrong with our Schools Transcript: It seems to me that if one is truly interested in liberty, which I think is the ultimate value that Milton Friedman talks […]
Friedman Friday” Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 3 of transcript and video) Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 3 of 6. Volume 6 – What’s Wrong with our Schools Transcript: If it […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 2 of 6. Volume 6 – What’s Wrong with our Schools Transcript: Groups of concerned parents and teachers decided to do something about it. They used private funds to take over empty stores and they […]
Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 1 of 6. Volume 6 – What’s Wrong with our Schools Transcript: Friedman: These youngsters are beginning another day at one of America’s public schools, Hyde Park High School in Boston. What happens when […]
Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are not present. This is a seven part series. Created Equal [7/7]. Milton Friedman’s Free to Choose […]
Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are not present. This is a seven part series. Created Equal [6/7]. Milton Friedman’s Free to Choose […]
Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are not present. This is a seven part series. Created Equal [5/7]. Milton Friedman’s Free to Choose […]
Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are not present. This is a seven part series. Created Equal [4/7]. Milton Friedman’s Free to Choose […]
Friedman Friday” Free to Choose by Milton Friedman: Episode “Created Equal” (Part 3 of transcript and video) Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other […]
Free to Choose by Milton Friedman: Episode “Created Equal” (Part 2 of transcript and video) Liberals like President Obama want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are […]
Milton Friedman and Ronald Reagan Liberals like President Obama (and John Brummett) want to shoot for an equality of outcome. That system does not work. In fact, our free society allows for the closest gap between the wealthy and the poor. Unlike other countries where free enterprise and other freedoms are not present. This is a seven part series. […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. TEMIN: We don’t think the big capital arose before the government did? VON HOFFMAN: Listen, what are we doing here? I mean __ defending big government is like defending death and taxes. […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen worked pretty well for a whole generation. Now anything that works well for a whole generation isn’t entirely bad. From the fact __ from that fact, and the undeniable fact that things […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. PART 5 of 7 MCKENZIE: Ah, well, that’s not on our agenda actually. (Laughter) VOICE OFF SCREEN: Why not? MCKENZIE: I boldly repeat the question, though, the expectation having been __ having […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. PART 4 of 7 The massive growth of central government that started after the depression has continued ever since. If anything, it has even speeded up in recent years. Each year there […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. PART 3 OF 7 Worse still, America’s depression was to become worldwide because of what lies behind these doors. This is the vault of the Federal Reserve Bank of New York. Inside […]
I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen. For the past 7 years Maureen Ramsey has had to buy food and clothes for her family out of a government handout. For the whole of that time, her husband, Steve, hasn’t […]
Friedman Friday:(“Free to Choose” episode 4 – From Cradle to Grave, Part 1 of 7) Volume 4 – From Cradle to Grave Abstract: Since the Depression years of the 1930s, there has been almost continuous expansion of governmental efforts to provide for people’s welfare. First, there was a tremendous expansion of public works. The Social Security Act […]
Michael Harrington: If you don’t have the expertise, the knowledge technology today, you’re out of the debate. And I think that we have to democratize information and government as well as the economy and society. FRIEDMAN: I am sorry to say Michael Harrington’s solution is not a solution to it. He wants minority rule, I […]
PETERSON: Well, let me ask you how you would cope with this problem, Dr. Friedman. The people decided that they wanted cool air, and there was tremendous need, and so we built a huge industry, the air conditioning industry, hundreds of thousands of jobs, tremendous earnings opportunities and nearly all of us now have air […]
Part 5 Milton Friedman: I do not believe it’s proper to put the situation in terms of industrialist versus government. On the contrary, one of the reasons why I am in favor of less government is because when you have more government industrialists take it over, and the two together form a coalition against the ordinary […]
The fundamental principal of the free society is voluntary cooperation. The economic market, buying and selling, is one example. But it’s only one example. Voluntary cooperation is far broader than that. To take an example that at first sight seems about as far away as you can get __ the language we speak; the words […]
_________________________ Pt3 Nowadays there’s a considerable amount of traffic at this border. People cross a little more freely than they use to. Many people from Hong Kong trade in China and the market has helped bring the two countries closer together, but the barriers between them are still very real. On this side […]
Aside from its harbor, the only other important resource of Hong Kong is people __ over 4_ million of them. Like America a century ago, Hong Kong in the past few decades has been a haven for people who sought the freedom to make the most of their own abilities. Many of them are […]
“FREE TO CHOOSE” 1: The Power of the Market (Milton Friedman) Free to Choose ^ | 1980 | Milton Friedman Posted on Monday, July 17, 2006 4:20:46 PM by Choose Ye This Day FREE TO CHOOSE: The Power of the Market Friedman: Once all of this was a swamp, covered with forest. The Canarce Indians […]
If you would like to see the first three episodes on inflation in Milton Friedman’s film series “Free to Choose” then go to a previous post I did. Ep. 9 – How to Cure Inflation [4/7]. Milton Friedman’s Free to Choose (1980) Uploaded by investbligurucom on Jun 16, 2010 While many people have a fairly […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Stearns Speaks on House Floor in Support of Balanced Budget Amendment Uploaded by RepCliffStearns on Nov 18, 2011 Speaking on House floor in support of Balanced Budget Resolution, 11/18/2011 ___________ 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 […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]
What a great defense of Milton Friedman!!!! Defaming Milton Friedman by Johan Norberg This article appeared in Reason Online on September 26, 2008 PRINT PAGE CITE THIS Sans Serif Serif Share with your friends: ShareThis In the future, if you tell a student or a journalist that you favor free markets and limited government, there is […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 2 of 2 Uploaded by PenguinProseMedia on Oct 26, 2011 2nd half of 1994 interview. ________________ I have a lot of respect for the Friedmans.Two Lucky People by Milton and Rose Friedman reviewed by David Frum — October 1998. However, I liked this review below better. It […]
Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Here is a review of “Two Lucky People.” […]
Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty by V. Sundaram Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]
Milton Friedman: Free To Choose – The Failure Of Socialism With Ronald Reagan (Full) Published on Mar 19, 2012 by NoNationalityNeeded Milton Friedman’s writings affected me greatly when I first discovered them and I wanted to share with you. We must not head down the path of socialism like Greece has done. Abstract: Ronald Reagan […]
Milton Friedman – Power of Choice (Biography) Part 3 Published on May 21, 2012 by BasicEconomics Tribute to Milton Friedman English Pages, 8. 9. 2008 Dear colleagues, dear friends, (1) It is a great honor for me to be asked to say a few words to this distinguished and very knowledgeable audience about one of our greatest […]
Milton Friedman – Power of Choice (Biography) Part 2 Published on May 21, 2012 by BasicEconomics My Tribute to Milton Friedman: The Little Giant of Free Market Economics By: admin- 11/17/2006 09:49 AM RESIZE: AAA Milton Friedman, the intellectual architect of the free-market reforms of the post-World War II era, was a dear friend. I […]
Milton Friedman – Power of Choice – Biography (Part 1) Published on May 20, 2012 by BasicEconomics David R. Henderson The Pursuit of Happiness ~ Milton Friedman: A Personal Tribute May 2007 • Volume: 57 • Issue: 4 David Henderson (davidrhenderson1950@gmail.com) is a research fellow with the Hoover Institution and an economics professor at […]
Milton Friedman and Chile – The Power of Choice Uploaded on May 13, 2011 In this excerpt from Free To Choose Network’s “The Power of Choice (2006)”, we set the record straight on Milton Friedman’s dealings with Chile — including training the Chicago Boys and his meeting with Augusto Pinochet. Was the tremendous prosperity unleashed […]
RARE Friedman Footage – On Keys to Reagan and Thatcher’s Success Margaret Thatcher and Milton Friedman were two of my heroes. Thatcher praises Friedman, her freedom fighter By George Jones, Political Editor 12:01AM GMT 17 Nov 2006 A tireless champion of the free market Let’s not get misty eyed over the Friedman legacy Milton Friedman, […]
Milton Friedman was a great economist and a fine speaker. ___________________ I have written before about Milton Friedman’s influence on the economy of Chile. Now I saw this fine article below fromhttp://www.heritage.org and below that article I have included an article from the Wall Street Journal that talks about Milton Friedman’s influence on Chile. I […]
December 06, 2011 03:54 PM Milton Friedman Explains The Negative Income Tax – 1968 0 comments By Gordonskene enlarge Milton Friedman and friends.DOWNLOADS: 36 PLAYS: 35 Embed The age-old question of Taxes. In the early 1960′s Economist Milton Friedman adopted an idea hatched in England in the 1950′s regarding a Negative Income Tax, to […]
RARE Friedman Footage – On Keys to Reagan and Thatcher’s Success Margaret Thatcher and Milton Friedman were two of my heroes. Milton Friedman on How Francois Mitterrand (and Failed Lefty Economics) Helped Re-elect Margaret Thatcher Matt Welch|Apr. 10, 2013 9:37 am Yesterday I wrote a column about how Margaret Thatcher liberated Western Europe from the […]
I have written about the tremendous increase in the food stamp program the last 9 years before and that means that both President Obama and Bush were guilty of not trying to slow down it’s growth. Furthermore, Republicans have been some of the biggest supporters of the food stamp program. Milton Friedman had a […]
Milton Friedman, Ronald Reagan And William F. Buckley Jr. Peter Robinson, 12.12.08, 12:01 AM EST In a time of crisis, don’t forget what they had to say. As the federal deficit surpasses $1 trillion, Congress debates a bailout for the Detroit automakers and President-elect Barack Obama draws up plans for a vast new stimulus package, […]
Citizens stopped six active shooters in 2021, according to a report by the FBI. (Photo Illustration: Dejan Markovic/EyeEm/Getty Images)
The FBI announced Monday that citizens stopped six active shooters in 2021, according to a report on active shooting incidents.
Citizens stopped six active shooters, whom the FBI defines as “one or more individuals actively engaged in killing or attempting to kill people in a populated area,” in 2021, killing four of them, according to the report “Active Shooter Incidents In The United States In 2021.” There were 61 active shooter incidents in 2021, 12 of which met the FBI’s criteria for a “mass killing,” up from 40 the previous year.
“The active aspect of the definition inherently implies the ongoing nature of an incident, and thus the potential for the response to affect the outcome, whereas a mass killing is defined as three or more killings in a single incident,” the FBI said in a Monday release.
In one incident, armed employees at the Jefferson Gun Outlet in Metairie, Louisiana, returned fire after an active shooter killed two people and injured two others on Feb. 20, 2021, the report said.
Citizens detained an active shooter in the Gaslamp Quarter of San Diego on April 22, 2021, according to the report. In Rigby, Idaho, a middle school teacher disarmed a 12-year-old female student who was firing a handgun on May 6, 2021, at a middle school.
An armed citizen killed an active shooter in an incident outside the Three Corners Townhouses in Fort Smith, Arkansas, on May 15, 2021, the report said.
An active shooter killed two people and wounded another on Oct. 21, 2021, before an armed employee fatally shot the shooter at Agrex Elevator in Superior, Nebraska, the report said.
The FBI report noted that 14 active shooters were killed by law enforcement, 11 committed suicide, 30 were taken into custody, one was killed in a car crash, and one was still at large.
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In a presumably futile effort to change their minds by learning how they think, I periodically try to figure out the left-wing mind.
Why, for instance, do some people believe in Keynesian economics, when it is premised on the fanciful notion that you can increase “spending power” by taking money out of the economy’s left pocket and putting it in the economy’s right pocket?
But I’m getting off track. I don’t want to get too serious because the purpose of this post is to share this satirical look at the how leftists rationalize their anti-gun biases.
Let’s take a look at two cities that are quite similar in terms of demographics and income. But they have very different murder rates. Your job is to pretend you’re a leftist and come up with an explanation.
To be fair, we can’t rule out cold weather as a possible explanation given this limited set of data.
Make your own Gun Free Zone
For what it’s worth, however, scholars who actually do real research, like David Kopel and John Lott, reach different conclusions.
Let’s begin with a good jab at one of the anti-Second Amendment groups.
But remember the serious point. If you’re a bad guy and know that a potential victim is sure to be unarmed, does that make you happy or sad?
I realize that an anti-gun zealot will respond by arguing that they want a world where the thugs and crooks also will be disarmed, but how likely is it that such people will turn in their weapons? In any event, most criminals are young men and potential victims need guns to compensate for the inability to match the physical strength of their attackers.
Next let’s look at a poster showing the kind of instructions that statists such as Mayor Bloomberg should post in public places.
These clowns expect us to have blind faith in the ability of public authorities, but the odds of a cop being immediately available when trouble strikes are almost nonexistent.
Here’s a poster that captures the blind naiveté of anti-gun activists. I don’t think I need to add any commentary.
Last but not least, here’s a sign that all anti-gun leftists – assuming they have the courage to publicly celebrate their beliefs – should post outside their homes.
If you enjoy these posters, you can view previous editions here, here, here, here, and here.
___________
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
To see the magnitude of the problem, let’s peruse the Budget and Economic Outlook, which was released yesterday by the Congressional Budget Office has some.
Most people are focusing on how deficits are going to climb from $1 trillion to $2 trillion-plus over the next 10 years.
That’s not good news, but we should be far more worried about the fact that the burden of government spending is growing faster than the private economy. As a result, government will be consuming an ever-larger share of national output.
The budget wonks who (mistakenly) focus on red ink say the problem is so serious that we need higher taxes.
They look at this chart, which is based on CBO’s baseline forecast (what will happen if taxes and spending are left on autopilot), and assert we have no choice but to raise taxes.
They point out that the annual deficit in 2032 will be almost $2.3 trillion and that it’s impossible cut spending by that much.
Needless to say, it would be a near-impossible political undertaking to cut $2.3 trillion in one year (though it would fulfill libertarian fantasies).
But what if, instead of kicking the can down the road, policymakers imposed some sort of overall spending cap to avoid a giant deficit in 10 year.
This second chart displays that scenario. I took CBO’s baseline (autopilot) numbers and assumed that spending could only increase by 1.4 percent annually starting in 2024.
As you can see, that modest bit of fiscal discipline completely eliminates the project $2.3 trillion annual deficit in 2032.
I’ll close by noting that there’s no need to fixate on whether the budget is balanced by 2032. What matters is trend lines.
It’s not good for government to grow faster than the private economy in the long run. And it’s not good for deficits and debt to climb as a share of economic output in the long run.
Both of those outcomes can be avoided if we have some sort of spending cap so that outlays grow slower than the private sector.
I prefer actual cuts (a requirement to reduce nominal spending each year).
I would be happy with a hard freeze (like we had for a few years after the Tea Party revolt).
As noted above, a 1.4 percent spending cap balances the budget by 2032.
But we would make progress, albeit slow progress, even if the spending cap allowed the budget to grow by 2.0 percent of 2.5 percent per year.
P.S. I start the spending cap in 2024 because spending is not projected to grow by very much between 2022 and 2023. That’s not because today’s politicians are being responsible, however. It’s simply a result of one-time pandemic emergency spending coming to an end. But since that one-time spending has a big impact on short-run numbers, I delayed the spending cap for one year.
P.P.S. The blue revenue line has a kink in 2025 because the baseline forecast assumes that many of the Trump tax cuts expire that year. If those tax cuts are extended or made permanent, revenues would be about $400 billion lower in 2032. As such, balancing the budget by that year would require a spending cap that allows annual outlays to increase by less than 0.9 percent per year.
The best-case scenario is that a spending cap is very stringent (say, limiting annual spending increases to 2 percent annually). This level of fiscal restraint reduces the burden of government spending compared to the private sector (i.e., it fulfills fiscal policy’s Golden Rule).
The avoid-harm scenario is that a spending cap prevents government from becoming a bigger burden. Given dismal long-run fiscal forecasts (a consequence of demographic change and poorly designed entitlement programs), this actually would be an impressive achievement.
There are also some auxiliary benefits of a spending cap.
A new working paper from Italy’s central bank, authored by Anna Laura Mancini and Pietro Tommasino, considers whether spending caps can mitigate the problem of dishonest budgeting by politicians.
…policy-makers have an incentive to “plan to cheat”. That is, they promise an amount of expenditures higher than what they will actually deliver, because this allows them to cater to the demands of the various groups of voters, and at the same time they present overoptimistic revenue forecasts, in order to preserve the appearance of fiscal discipline. Once the extra revenues hoped for by the government fail to materialize, budgeted investment expenditures are downsized or abandoned altogether. In this context, caps on realized spending can contribute to more realistic ex ante spending plans. Indeed, politicians have less room to inflate planned expenditures, once there is a legal ceiling in place.
The authors crunch the numbers and conclude that spending caps result in a greater level of fiscal honesty.
In this paper, we provide evidence in favour of this theoretical intuition, exploiting a unique dataset including the ex-ante budget plans as well as ex-post budget outcomes of…a rule that constrains capital expenditures in municipalities with more than 5,000 residents. …Our analysis show that the municipalities subject to the new capital-spending rule significantly reduced their over-optimism in expenditure projections… Furthermore, in the new regime revenue projections are also more accurate (less over-optimistic). …The reform reduced the forecast error concerning capital expenditures… The effects is significant both statistically and in economic terms. …the introduction of the cap on investment reduced the forecast error on investment expenditures by almost €1 mln, or 35% of the pre-reform average error.
For wonky readers, Figure 1 shows some of relevant data.
For what it’s worth, we seem to have a different problem in the United States.
Rather than exaggerate potential spending on so-called public investment, as seems to have been the case in Italy, American politicians generally low-ball cost estimates for infrastructure projects.
The good news is that a spending cap solves both the Italian version of the problem and the American version of the problem.
As the authors found in their research, it removes the incentive for dishonest budgeting in Italy. And, if adopted in the United States, politicians would learn that it doesn’t help to produce laughably low cost estimates if a spending cap means there is no way of financing cost overruns in the future.
P.S. There is a spending limit in Hong Kong’s constitution, and it has generated very positive results. Given China’s increasing control, it’s unclear how effective it will be in the future.
P.P.S. There’s also a spending limit in Colorado’s constitution, known as the Taxpayers Bill of Rights. It has been very successful.
P.P.P.S. Last month, I wrote about research from both the IMF and the ECB about the benefits of spending caps.
Steve Forbes is 100 percent correct, as was Milton Friedman. Bloated and wasteful government spending is the problem, not inadequate revenue. Deficits are merely a symptom of over-spending:
The late Nobel Prize-winning economist Milton Friedman once famously observed that he would prefer a federal government budget of $1 trillion (this was when a trillion bucks was real money) with a big deficit to a federal budget of $2 trillion that was balanced. His obvious point was that the bigger Washington is, the more of a burden it puts on the economy, whether it finances its spending via taxation, borrowing or printing money. So it’s not President Obama’s mind-numbing, from-here-to-eternity deficits that we should be worrying about but the increasing deadweight put on the rest of us by Washington’s burgeoning budget bloat. Senate Republicans were right to put the kibosh on the formation of a formal bipartisan deficit-fighting commission. Those things always end up increasing taxes while doing little to reduce spending. …One of the biggest economic myths since the Great Depression is that governments can ameliorate or counteract the ebbs and flows of free markets. Government spending has never worked as a trigger for sustained and vibrant economic growth. Ever. Scholarship has demonstrated that the New Deal perpetuated the Depression rather than cured it. On the eve of the Depression the U.S. had the lowest unemployment rate among developed nations. But a decade later, despite six years of FDR’s New Deal, our unemployment rate was one of the highest among developed economies. Japan’s serial stimulus programs over the past two decades have repeatedly underscored this truth. The more the government takes as a proportion of the economy, the worse equity markets do and the higher the unemployment rate.
We’ll start with this video from Kite and Key Media, which correctly observes that entitlement programs are the main cause of red ink.
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I like that the video pointed out how tax-the-rich schemeswouldn’t work, though it would have been nice if they added some information on how genuine entitlement reform could solve the problem (as you can see here and here, I’ve also nit-picked other debt-themed videos).
But my main message, which I’ve shared over and over again, is that deficits and debt are merely a symptom. The underlying disease is excessive government spending.
Now let’s look at some recent articles on the topic.
We’ll start with Eric Boehm’s column for Reason, which explains how red ink has exploded in recent years.
America’s national debt exceeded $10 trillion for the first time ever in October 2008. By mid-September 2017 the national debt had doubled to $20 trillion. …data released by the U.S. Treasury confirmed that the national debt reached a new milestone: $30 trillion.…Entitlements like Social Security and Medicare are in dire fiscal straits and will become even more costly as the average American gets older. Even without another unexpected crisis, deficits will exceed $1 trillion annually, which means the debt will continue growing, both in real terms and as a percentage of the economy. The Congressional Budget Office estimates that the federal government will add another $12.2 trillion to the debt by 2031.
As already stated, I think the real problem is the spending and the debt is the symptom.
But it is possible, of course, that debt rises so high that investors (the people who buy government bonds) begin to lose faith that they will get repaid.
At that point, governments have to pay higher interest rates to compensate for perceived risk of default, which exacerbates the fiscal burden.
And if there’s not a credible plan to fix the problem, a country can go into a downward spiral. In other words, a debt crisis.
This is what happened to Greece. And I think it’s just a matter of time before it happens to Italy.
Could the United States also be hit by a debt crisis? Will we reach a “tipping point” that leads to the aforementioned loss of faith?
That’s one of the possibilities mentioned in the New York Timescolumn by Peter Coy.
It’s hard to know how much to worry about the federal debt of the United States. …Either the United States can continue to run big deficits and skate along with no harm done or it’s at risk of losing investors’ confidence and having to pay higher interest rates on its debt, which would suppress economic growth. …the huge increase in federal debt incurred during and after the past two recessions — those of 2007-09 and 2020 — has used upa lot of the “fiscal space” the United States once had. In other words, the federal government is closer to the tipping point where big increases in debt finally start to become a real problem. …any given amount of debt becomes easier to sustain as long as the growth rate of the economy (and thus the growth rate of tax revenue) is higher than the interest rate on the debt. In that scenario, interest payments gradually shrink relative to tax revenue. …but it doesn’t explain how much more the debt can grow. …Past a certain point, there’s a double whammy of more dollars of debt plus higher interest costs on each dollar. …sovereign debt crises tend to be self-fulfilling prophecies: Investors get nervous about a government’s ability to pay, so they demand higher interest rates, which raise borrowing costs and produce the bad outcome they feared. It’s a dynamic that Argentines are familiar with — and that Americans had better hope they never experience.
For what it’s worth, I think other major nations will suffer fiscal crisis before the problem becomes acute in the United States.
I really this will make me sound uncharacteristically optimistic, but I’m keeping my fingers crossed that this will finally lead politicians to adopt a spending cap so we don’t become Argentina.
P.S. The Wall Street Journal recently editorialized on the issue of government debt and made a very important point about the difference between the $30 trillion “gross debt” and the “debt held by the public,” which is about $6 trillion lower.
…the debt really isn’t $30 trillion. About $6 trillion of that is debt the government owes to itself in Social Security and other IOUs. …The debt held by the public is some $24 trillion, which is bad enough.
As I’ve noted when writing about Social Security, the IOUs in government trust funds are not real.
Indeed, if you want to know whether some is both honest and knowledgeable about budget matters, ask them which measure of the national debt really matters.
As you can see from this exchange of tweets, competent and careful budget people (regardless of whether they favor big government or small government) focus on “debt held by the public,” which is the term for the money government actually borrows from credit markets.
If you want to know the difference between the various types of government debt – including “unfunded liabilities” – watch this video.
Politicians like to spend money and they don’t particularly care whether that spending is financed by taxes or financed by borrowing (both bad options).
As Milton Friedman sagely observed, that means they will spend every penny they collect in taxes plus as much additional spending financed by borrowing that the political system will allow.
The IMF published a study on this issue about 10 years ago. The authors (Michael Kumhof, Douglas Laxton, and Daniel Leigh) assert that there’s no way of knowing whether Starve the Beast will lead to good or bad results.
…there is no consensus regarding the macroeconomic and welfare consequences of implementing a starve-the-beast approach, henceforth referred to as STB. …it could be beneficial in the ideal case in which it results in cuts in entirely wasteful government spending. In particular, lower spending frees up resources for private consumption, and the associatedlower tax rates reduce distortions in the economy. On the other hand, …lower government spending may itself entail welfare losses…if it augments theproductivity of private factors of production. …the paper examines whether the principal macroeconomic variables such as GDP and consumption, both in the United States and in the rest of the world, respond positively to this policy. …In addition, the paper assesses how the welfare effects depend on the degree to which government spending directly contributes to household welfare or to productivity.
The authors don’t really push any particular conclusion. Instead, they show various economic outcomes depending on with assumptions one adopts.
Since plenty of research shows that government spending is not a net plus for the economy (even IMF economists agree on that point), and because I think a less-punitive tax system is possible (and desirable) if there’s a smaller burden of government spending, I think the findings shown in Figure 4 make the most sense.
Now let’s shift from academic analysis to policy analysis.
In a piece for National Review back in July 2020, Jim Geraghty notes that Starve the Beast has an impact on government finances at the state level.
…we’re probably not going to see a massive expansion of government at the state level in the coming year or two. …Thanks to the pandemic lockdown bringing vast swaths of the economy to a halt, state tax revenues are plummeting.…So states will have much less tax revenue, constitutional balanced-budget requirements that are not easily repealed, and a limited amount of budgetary tricks to work around it. State governments could attempt to raise taxes, but that’s going to be unpopular and hurt state economies when they’re already struggling. Add it all up and it’s a tough set of circumstances for a dramatic expansion of government, no matter how ardently progressive the governor and state legislatures are.
Now let’s look at the most unintentional endorsement of Stave the Beast.
A couple of years ago, Paul Krugman sort of admitted that cutting taxes was a potentially effective strategy for spending restraint.
…the same Republicans now wringing their hands over budget deficits…blew up that same deficit by enacting a huge tax cut for corporations and the wealthy. …this has been the G.O.P.’s budget strategy for decades. First, cut taxes. Then, bemoan the deficit created by those tax cuts and demand cuts in social spending.Lather, rinse, repeat. This strategy, known as “starve the beast,” has been around since the 1970s, when Republican economists like Alan Greenspan and Milton Friedman began declaring that the role of tax cuts in worsening budget deficits was a feature, not a bug. As Greenspan openly put it in 1978, the goal was to rein in spending with tax cuts that reduce revenue, then “trust that there is a political limit to deficit spending.” …voters should realize that the threat to programs… Social Security and Medicare as we know them will be very much in danger.
In other words, Krugman doesn’t like Starve the Beast because he fears it is effective (just like he also acknowledges the Laffer Curve, even though he’s opposed to tax cuts).
Let’s close by looking at some very powerful real-world evidence. Over the past 50 years, there’s been a massive increase in the tax burden in Western Europe.
Did all that additional tax revenue lead to lower deficits and less debt?
Nope, the opposite happened. European politicians spent every penny of the new tax revenue (much of it from value-added taxes). And then they added even more spending financed by additional borrowing.
To be fair, one could argue that this was an argument for the view of “Don’t Feed the Beast” rather than “Starve the Beast,” but it nonetheless shows that more money in the hands of politicians simply means more spending. And more red ink.
P.S. I had a discussion last year with Gene Tunny about the issue of “state capacity libertarianism.”
Friedman & Sowell: Should Our School System Be Privatized?
Regular readers know that the two things that get me most excited are the Georgia Bulldogs and the fight against a bloated public sector that is ineffective in the best of circumstances and more often than not is a threat to our freedoms.
So you will not be surprised to know that I am delighted that former Georgia Bulldog star Fran Tarkenton (who also happened to play in the NFL) has a superb piece in the Wall Street Journal ripping apart the inherent inefficiency of government-run monopoly schools.
Here is the key passage.
Imagine the National Football League in an alternate reality. Each player’s salary is based on how long he’s been in the league. It’s about tenure, not talent. The same scale is used for every player, no matter whether he’s an All-Pro quarterback or the last man on the roster. For every year a player’s been in this NFL, he gets a bump in pay. The only difference between Tom Brady and the worst player in the league is a few years of step increases. And if a player makes it through his third season, he can never be cut from the roster until he chooses to retire, except in the most extreme cases of misconduct. Let’s face the truth about this alternate reality: The on-field product would steadily decline. Why bother playing harder or better and risk getting hurt? No matter how much money was poured into the league, it wouldn’t get better. In fact, in many ways the disincentive to play harder or to try to stand out would be even stronger with more money. Of course, a few wild-eyed reformers might suggest the whole system was broken and needed revamping to reward better results, but the players union would refuse to budge and then demonize the reform advocates: “They hate football. They hate the players. They hate the fans.” The only thing that might get done would be building bigger, more expensive stadiums and installing more state-of-the-art technology. But that just wouldn’t help.
This sounds absurd, of course, but Mr. Tarkenton goes on to explain that this is precisely how government schools operate.
If you haven’t figured it out yet, the NFL in this alternate reality is the real-life American public education system. Teachers’ salaries have no relation to whether teachers are actually good at their job—excellence isn’t rewarded, and neither is extra effort. Pay is almost solely determined by how many years they’ve been teaching. That’s it. After a teacher earns tenure, which is often essentially automatic, firing him or her becomes almost impossible, no matter how bad the performance might be. And if you criticize the system, you’re demonized for hating teachers and not believing in our nation’s children. Inflation-adjusted spending per student in the United States has nearly tripled since 1970. According to the Organization for Economic Cooperation and Development, we spend more per student than any nation except Switzerland, with only middling results to show for it.
Actually, I will disagree with the last sentence of this excerpt. We’re not even getting “middling results.” Here’s a chart from an earlier post showing that we’ve gotten more bureaucracy and more spending but no improvement over the past 40 years.
Milton Friedman’s FREE TO CHOOSE “The Tyranny of Control” Transcript and Video (60 Minutes) In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
Open letter to President Obama (Part 654) (Emailed to White House on July 22, 2013) 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 […]
Open letter to President Obama (Part 650) (Emailed to White House on July 22, 2013) 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 […]
I’m a knee-jerk supporter of free trade, which simply means I don’t think politicians and bureaucrats should be able to interfere with my freedom to buy good and services from people who happen to live in other nations.
But my support for free trade is not just based on ideology. I also cite data on how trade taxes and other restrictions make nations poorer.
And the negative effects go beyond overall economic output. Researchers also find job losses, lower productivity, and increased inequality.
Today, let’s look at some new research on this topic. The IMF earlier this year released a new working paper authored by Kim Beaton, Valerie Cerra, and Metodij Hadzi-Vaskov.
Here are the main results.
…firms in countries and industries experiencing greater competition from imports reduce employment slightly. …Even so, the low elasticity of employment growth to imports indicates a limited adverse impact. …Contrary to popular belief and anti-globalization sentiment, import competition is associated with higher average wage growth across the global sample of firms…, driven by the EMDEs… Taking employment and wages together, import growth in an industry leads to a rise in the wage bill of domestic firms in the same industry. Thus, while import competition generates some job dislocations, the overall impact on earnings of workers in the same industry is positive.
Here’s a chart that was included with the study.
One unexpected finding from the study is that rich nations are more likely to enjoy job gains.
The job loss associated with import competition appears to be dominated by the behavior of firms in emerging and developing economies… In contrast, the import shock provides a statistically significant positive boost to firms’ employment in advanced economies.
And here’s a finding that should not surprise anyone.
…we find relatively positive outcomes of import competition on exposed firms, including higher sales, profits, wage growth, and investment. Moreover, the import shock to exposed firms, and the ensuing employment changes, do not take place in isolation. Import growth often goes hand in hand with export growth, which spurs job creation.
But I didn’t like everything I found in the paper. In some circumstances, trade reduces inequality, but by hurting those with high incomes rather than helping those with low incomes.
Our results also show that firms experiencing higher imports shocks are those with higher average wage levels. Thus, to the extent that employment growth is lower in these more exposed firms, it could lead to lower inequality.
When the Commerce Department announced in February that the United States had a record trade deficit for 2021, I shared this video to help make the point that those trade numbers were that year’s “least important economic news.”
When Americans use dollars to buy goods from other nations, those dollars are only valuable to foreigners because they can use them to buy things from America.
In many cases, they buy American goods and services. But they also use many of those dollars to invest in the U.S. economy.
That’s generally a positive thing. It’s a vote of confidence about America’s economic future.
Jeff Jacoby of the Boston Globe shares my viewpoint. He recently opined on this issue, echoing the important insight about the link between trade flows and investment flows.
The US trade deficit hit an all-time high in March, widening to nearly $110 billion as the nation imported considerably more goods than it exported. That can’t be good, right? Actually, it’s fine. …It’s not an indication of actual economic weakness. …Quite the contrary: All things being equal, imports are usually evidence of economic vitality and success.…The dollars Americans spend on imports aren’t “lost.” They are exchanged for desirable and affordable goods, services, parts, and commodities that strengthen Americans’ economy while elevating their US lifestyle. Better still, those dollars then come back to the United States, where they are used to invest in American assets or buy American exports, creating even more value and putting even more Americans to work. …a trade “deficit” isn’t a debt we owe. It is an accounting entry that tells us how much more we were enriched by foreigners than they were by us. ..the US economy has some real problems. Happily, the trade deficit isn’t one of them. Imports are good. And more imports? They’re good too.
This does not mean, however, that everyone is a winner.
As I explain in this video, jobs are destroyed when there is trade between nations. But I also point out that jobs are destroyed by trade inside a nation’s borders.
That’s bad news for workers in sectors that are dying (such as typewriter makers after personal computers hit the market).
John Cowperthwaite deserves a lot of credit for Hong Kong’s prosperity. As a British appointee, he took a hands-off policy and allowed the colony’s economy to thrive. He didn’t even want the government to collect statistics since that would give interventionists data that might be used to argue for interventionism.
On the other hand, there are some statistics that cause a lot of mischief.
I’ve argued, for instance, that we should focus on how national prosperity is generated (gross domestic income) rather than how it is allocated (gross domestic product). If we changed the focus to GDI, the debate would more naturally focus on pro-growth policies to boost wages, small business income, and corporate profits rather than the misguided policies (such asKeynesian economics) that are enabled by a focus on GDP.
That being said, there’s a good argument that the worst government statistic is the “trade deficit.”
This is a very destructive piece of data because people instinctively assume a “deficit” is bad. Yet I have a trade deficit every year with my local grocery store. I’m always buying things from them and they never buy anything from me. Does that mean I’m a “loser”? Of course not. Voluntary exchange, by definition, means that both parties gain from any transaction. And this principle applies when voluntary exchange occurs across national borders.
Moreover, people oftentimes don’t realize that the necessary and automatic flip side of a “trade deficit” is a “capital surplus.” In other words, when foreign companies acquire dollars by selling to American consumers, they frequently decide that investing in the American economy is the best use of that money. And the huge amount of investment from overseas is a sign of comparative prosperity and vitality, not a sign of weakness.
And for any readers who nonetheless think protectionism might be a good idea, I challenge them to answer these eight questions.
I’m confident that both Donald Trump and Bernie Sanders wouldn’t be able to successfully answer any of them. Yet it appears they’ve gained some traction with voters by calling for protectionism.
That’s quite unfortunate. If the pro-trade policy consensus in America breaks down, that would create dangerous opportunities for politicians and bureaucrats to rig the game in favor of special interests while also imposing higher costs of taxpayers and consumers.
Let’s dig into the issue.
In a column for the Wall Street Journal, Mort Kondracke and Matthew Slaughter combine to produce a strong defense of trade.
…the four leading presidential candidates…oppose the U.S. ratifying the Trans-Pacific Partnership. All four demonize trade the same way. …Where is the leader with the courage to tell the truth? To say that trade made this nation great, and that trade barriers will destroy far more jobs than they can ever “save.” …America’s exporters and importers are among the country’s most dynamic companies, paying their workers about 15%-20% more than workers earn elsewhere in the economy. The overall gains are large. Trade and related activities—spurred by accords such as the North American Free Trade Agreement, or Nafta, have boosted annual U.S. income today by about 10 percentage points of GDP relative to what it would have been otherwise. This translates into an aggregate gain of about $1.8 trillion in 2015—thousands of dollars per U.S. household every year. …creative destruction—the movement of people and capital from weaker businesses to stronger ones and new opportunities—is how many of the gains from trade arise. …For generations, American presidents of both parties have spoken about the benefits of trade. “Economic isolation and political leadership are wholly incompatible,” warned John Kennedy. “A creative, competitive America is the answer to a changing world,” said Ronald Reagan. “We should always remember: protectionism is destructionism.”
By the way, I think Kondracke and Slaughter paint with too broad a brush. Both Cruz and Clinton are far less protectionist than Trump and Sanders. Though the authors are correct in noting that they’ve been reluctant (especially in the case of Clinton) to vigorously defend free trade.
There are of course major difference between the insidious Trump and buffoonish Sanders. …Still, the real selling point of each boils down to one issue: In the indecorous language of the pollster, Pat Caddell, Americans feel “they have been screwed” by free trade. …free trade is in retreat as protectionism becomes the common thread across the both political parties. It is as though the economic unwisdom of the 1930 Smoot-Hawley Tariff Act is back.
Richard makes a very important point that politicians often support protectionism in an attempt to hide the damage they do with other misguided policies.
Free trade offers an uncompromising indictment of, and a powerful corrective for, America’s unsound economic policies. …the reason that local businesses outsource from the United States is the same reason why foreign businesses are reluctant to expand operations here. Our regulatory and labor environment is hostile to economic growth and there are no signs of that abating anytime soon. …the steady decline in freedom and productivity inside the United States has continued apace. Ironically, the strong likelihood that the next American president will expand protectionist practices will only make matters worse: firms, both foreign and domestic, are more reluctant to invest in the United States…free trade gives the federal government and the individual states strong incentives to clean up their act so that they can once again be attractive to foreign investment.
My buddy Ross Kaminsky explains in the American Spectator that free trade is good because it is part of the competitive process that boosts living standards, particularly for the poor.
…in trade, as in any economic endeavor, there are losers in the short run. Capitalism is, after all, fundamentally a system of creative destruction. But if there is any area of agreement among economists of all political stripes…it is that free trade provides large net benefits to the societies that engage in it, even if other nations do not lower trade barriers to the same degree. Furthermore, the benefits of trade accrue in large measure to the lower economic echelons of society in an extension of Schumpeter’s profound observation that “the capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.”
And Ross echoes Richard Epstein’s point about the real problem being anti-growth policies that make America less competitive.
Trade is complex and like all complex things politicians will dumb it down in a way that benefits them, generally by lying to the public and creating a frothy anger against those “damn furiners” instead of pointing fingers at the true culprits: unions, regulators, and politicians of all stripes.
Ross and Richard are right. If politicians really want more jobs in America, they should be adopting policies to boost U.S. competitiveness.
In an editorial, the Wall Street Journal debunks Donald Trump’s protectionist tirade against China.
The real-estate developer recently added Japan to his most-wanted list of job killers… “They’re killing us. You know what we sell to Japan? Practically nothing.” Is $116 billion worth of annual goods and services exports to Japan practically nothing? Japan is the fourth largest U.S. export market in goods after Canada, Mexico and China. …The best way to boost American exports is to remove trade barriers with new trade agreements. U.S. farm producers would particularly benefit from the Trans-Pacific Partnership with Japan and 10 other countries. Japanese tariffs on beef would fall to 9% in the 16th year of the deal from 38.5% while the 20% tariff on ground pork would be eliminated in six years. Japan’s 21.3% levy on poultry and eggs would be abolished in six to 13 years.
Writing for the Washington Post, David Ignatius defends trade in general and trade agreements in particular.
…the revolt against free trade that has captured both parties could do the most long-term damage. …there’s strong evidence that trade has benefited the U.S. economy and created whole new industries in which the United States is dominant. That’s the essence of the “creative destruction” that makes a market economy so potent: It relentlessly pushes innovation and change. …The bipartisan protectionism of Trump and Sanders has focused its attacks on the Trans-Pacific Partnership… Robert Z. Lawrence and Tyler Moran estimate that between 2017 and 2026, when TPP would have its major impact, the costs to displaced workers would be 6 percent of the benefits to the economy — or an 18-to-1 benefit-to-cost ratio. …David Autor, David Dorn and Gordon Hanson…noted that the pact would promote trade in knowledge industries where the United States has a big advantage and that “killing the TPP would do little to bring factory work back to America.”
Ignatius also makes a very important observation that protectionists want us to be scared of nations that have much bigger problems than the United States.
Trump, the businessman, seems weirdly out of touch with real economic trends. He speaks of Japan as though it were an economic powerhouse, when it has actually suffered a two-decades-long slump; he describes a surging China, when the numbers show its growth is sagging.
Let’s close with some good news. Politicians may be engaging in anti-trade demagoguery, and there may be some voters that are motivated by hostility to voluntary exchange, but that doesn’t mean the protectionists have won.
Indeed, pro-trade sentiment has never been higher by some measures. Here’s some amazingly positive polling data from Gallup.
P.S. One final point. The growing burden of government spending and taxation since World War II have been very unfortunate, but the good news is that we have strong evidence that the economic damage of worsening fiscal policy has been offset by the economic gains from trade liberalization. It would be tragic to see that reversed.
Milton Friedman’s FREE TO CHOOSE “The Tyranny of Control” Transcript and Video (60 Minutes) In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
Open letter to President Obama (Part 654) (Emailed to White House on July 22, 2013) 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 […]
Open letter to President Obama (Part 650) (Emailed to White House on July 22, 2013) 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 […]
Now let’s augment our previous analysis exposing how coronavirus-related spending has been a windfall for criminals.
We’ll start with a report from the Washington Post , authored by Tony Romm and Yeganeh Torbati. It contains a headline that begins with a quote that could apply to just about anything the government does.
Testifying at a little-noticed congressional hearing this spring, a top watchdog for the Labor Department estimated there could have been “at least” $163 billion in unemployment-related “overpayments,”a projection that includes wrongly paid sums as well as “significant” benefits obtained by malicious actors. …In many cases, the criminals stole the unemployment funds using real Americans’ personal information. They bombarded states with applications filed in the names of actual workers or people in prison — sometimes to such a degree that, in the case of Maryland, fraudulent claims came to outnumber real requests for help..
You won’t be surprised to learn that some bureaucrats did not want to stop the fraud.
Some of the malicious actors potentially even avoided detection, at least for a time, after the Labor Department refused to supply information needed to assist federal fraud investigations.
In California, state officials acknowledged in October 2021 that they may have paid out more than $20 billion in undeserved unemployment payments to criminals. That included at least $810 million that had been wrongly paid to applicants whose information matched the names of people in prison.
The Wall Street Journal also opined on the topic of wasteful covid-related spending, but its editorial focused on the $1.9 trillion boondoggle that was pushed through by Biden.
…what happened to the $1.9 trillion for Covid Democrats passed last March? Most went to transfer payments, including child tax credits, enhanced unemployment benefitsand stimulus checks. About a quarter subsidized state and local budgets and schools. Democrats appropriated a mere $80 billion for public health, only $16 billion of which was available for vaccines and therapies. …Democrats skimped on vaccine and therapies in order to ladle benefits to their political constituencies.
The bottom line is that Biden used the pandemic as an excuse to squander $1.9 trillion, even though at most only $80 billion of the money was for anything that was even vaguely related to vaccines and treatments.
I wonder whether we’ll ever learn how much of the remaining $1.82 trillion was wasted?
I’m guessing the answer is $1.82 trillion, but we won’t know how much was lost to run-of-the-mill waste and how much was lost to outright fraud.
P.S. Don’t forget that all government spending, even the small fraction that is spent wisely and efficiently, imposes economic costs. For more information, click here, here, here, here, here, and here.
I identified four heroes from the “Battle of Ideas” video I shared in late August – Friedrich Hayek, Milton Friedman, Ronald Reagan, and Margaret Thatcher. Here’s one of those heroes, Milton Friedman, explaining what’s needed to control big government.
Friedman Fundamentals: How To Control Big Government
For all intents and purposes, Friedman is pointing out that there’s a “public choice” incentive for government to expand.
To counteract that disturbing trend, he explains that we need a high level of “societal capital.” In other words, we need a self-reliant and ethical populace – i.e., people who realize it’s wrong to use the coercive power of government to take from others.
Sadly, I don’t think that’s an accurate description of today’s United States.
So how, then, can we get control of government?
Since politicians are unlikely to control spending in the short run (their time horizon is always the next election), our best hope is to get them to agree to a rule that constrains what can happen in the future.
There are many reasons to support a spending cap, including the obvious observation that an expenditure limit (as it is sometimes called) directly addresses the actual problem of excessive government.
And addressing the underlying disease works better than rules that focus on symptoms, such as balanced budget requirements or anti-deficit mandates.
You’ll notice toward the end of the video that the narrator cites pro-spending cap research from international bureaucracies, which is remarkable since those institutions normally have a biasfor bigger government.
I’ve also written about that research, citing studies by the International Monetary Fund (here and here), the Organization for Economic Cooperation and Development (here and here) and the European Central Bank (here).
Today, let’s look at more evidence from these bureaucracies.
We’ll start with a new study from the European Central Bank. Here’s some of what the authors (Nicholai Benalal, Maximilian Freier,Wim Melyn, Stefan Van Parys, and Lukas Reiss) found when comparing spending limits and anti-deficit rules.
…this paper provides an in-depth assessment of two alternative measures of fiscal consolidation and expansion:the change in the structural balance (dSB) and the expenditure benchmark (EB).Both the dSB and the EB are currently used to assess compliance with the fiscalrules under the Stability and Growth Pact (SGP).…The EB wasintroduced as an indicator in 2011, and has gained in importance relative to the dSBsince the European Commission began to put more emphasis on it in 2016. …A comparison of the fiscal performance of euro area countries revealssignificant differences depending on whether the assessment is based on the dSB orthe EB. …this paper finds that the EB has advantages over the dSB as a fiscalperformance indicator. …expenditure rules…provide more predictability in fiscal requirements. …Even more importantly, the EB can be shown to be less procyclical as a fiscal rule than the dSB.
Let’s also review some 2019 research from the International Monetary Fund.
This study (authored by Kodjovi Eklou and Marcelin Joanis) looks at whether fiscal rules can constrain vote-buying politicians.
In order to increase their chances of reelection, politicians are known to undertake fiscal manipulations, especially in election years. These fiscal manipulations typically take the form of increased public expenditure… Many countries, both developed and developing, have adopted fiscal rules in recent decades as an attempt to enforce fiscal discipline. …In this paper, we employ a cross-country panel dataset in order to test whether fiscal rules adopted in developing countries have been effective in constraining political budget cycles. The dataset covers 67 developing countries over the period 1985-2007. …Our dependent variable is the general government’s final consumption expenditure as a share of GDP.
Here’s what the authors concluded about the effectiveness of spending caps.
Our empirical evidence in a sample of 67 developing countries over the period 1985-2007, shows that fiscal rules cause fiscal discipline over the electoral cycle. More specifically, in election years with fiscal rules in place, public consumption is reduced by 1.65% point of GDP as compared to election years without these rules. Furthermore, the effectiveness of these rules depends on their type… In particular, expenditure rules, rules covering the general government and rules characterized by a monitoring body outside the government dampen political budget cycles in government consumption.
Indeed, footnote 12 of the paper specifically notes the superiority of expenditure limits.
…the results show that public consumption is reduced by 2.44% points during election years with expenditure rules in place. The findings on expenditure rules are consistent with Cordes et al. (2015) who show that the compliance rate for these rules are high.
Last but not least, the fiscal experts at the Office of Management and Budget included in Trump’s final budget some very encouraging language at the end of Chapter 10 of the Analytical Perspectives.
…additional efforts to control spending are needed. Several budget process reforms should be considered, including setting spending caps… Outlay caps that are consistent with the historical average as a share of gross domestic product (GDP),post-World War II levels could be enforced with sequestration across programs similar to other budget enforcement regimes. An outlay cap on mandatory spending would complement discretionary caps, which have been in place since 2013. The Budget proposes to continue discretionary caps through 2025 at declining levels and declining levels through 2030.
Trump was a big spender, of course, but at least there were people in his administration who realized there was a problem.
P.S. It’s also interesting that the authors of the IMF study found that fiscal rules work better in democracies.
…estimates focusing on the subsample of democratic elections. The effect of fiscal rules on the political budget cycle is larger… More specifically, public consumption is reduced by 2.46% point of GDP (while it is 1.65% point in the baseline).
This may not bode well for the durability of Hong Kong’s spending cap.
The authors also found that foreign aid makes it less likely that a government will follow sensible policy.
Foreign aid, which relaxes the budget constraint of the government, is negatively correlated with the probability of having fiscal rules.
Politicians like to spend money and they don’t particularly care whether that spending is financed by taxes or financed by borrowing (both bad options).
As Milton Friedman sagely observed, that means they will spend every penny they collect in taxes plus as much additional spending financed by borrowing that the political system will allow.
The IMF published a study on this issue about 10 years ago. The authors (Michael Kumhof, Douglas Laxton, and Daniel Leigh) assert that there’s no way of knowing whether Starve the Beast will lead to good or bad results.
…there is no consensus regarding the macroeconomic and welfare consequences of implementing a starve-the-beast approach, henceforth referred to as STB. …it could be beneficial in the ideal case in which it results in cuts in entirely wasteful government spending. In particular, lower spending frees up resources for private consumption, and the associatedlower tax rates reduce distortions in the economy. On the other hand, …lower government spending may itself entail welfare losses…if it augments theproductivity of private factors of production. …the paper examines whether the principal macroeconomic variables such as GDP and consumption, both in the United States and in the rest of the world, respond positively to this policy. …In addition, the paper assesses how the welfare effects depend on the degree to which government spending directly contributes to household welfare or to productivity.
The authors don’t really push any particular conclusion. Instead, they show various economic outcomes depending on with assumptions one adopts.
Since plenty of research shows that government spending is not a net plus for the economy (even IMF economists agree on that point), and because I think a less-punitive tax system is possible (and desirable) if there’s a smaller burden of government spending, I think the findings shown in Figure 4 make the most sense.
Now let’s shift from academic analysis to policy analysis.
In a piece for National Review back in July 2020, Jim Geraghty notes that Starve the Beast has an impact on government finances at the state level.
…we’re probably not going to see a massive expansion of government at the state level in the coming year or two. …Thanks to the pandemic lockdown bringing vast swaths of the economy to a halt, state tax revenues are plummeting.…So states will have much less tax revenue, constitutional balanced-budget requirements that are not easily repealed, and a limited amount of budgetary tricks to work around it. State governments could attempt to raise taxes, but that’s going to be unpopular and hurt state economies when they’re already struggling. Add it all up and it’s a tough set of circumstances for a dramatic expansion of government, no matter how ardently progressive the governor and state legislatures are.
Now let’s look at the most unintentional endorsement of Stave the Beast.
A couple of years ago, Paul Krugman sort of admitted that cutting taxes was a potentially effective strategy for spending restraint.
…the same Republicans now wringing their hands over budget deficits…blew up that same deficit by enacting a huge tax cut for corporations and the wealthy. …this has been the G.O.P.’s budget strategy for decades. First, cut taxes. Then, bemoan the deficit created by those tax cuts and demand cuts in social spending.Lather, rinse, repeat. This strategy, known as “starve the beast,” has been around since the 1970s, when Republican economists like Alan Greenspan and Milton Friedman began declaring that the role of tax cuts in worsening budget deficits was a feature, not a bug. As Greenspan openly put it in 1978, the goal was to rein in spending with tax cuts that reduce revenue, then “trust that there is a political limit to deficit spending.” …voters should realize that the threat to programs… Social Security and Medicare as we know them will be very much in danger.
In other words, Krugman doesn’t like Starve the Beast because he fears it is effective (just like he also acknowledges the Laffer Curve, even though he’s opposed to tax cuts).
Let’s close by looking at some very powerful real-world evidence. Over the past 50 years, there’s been a massive increase in the tax burden in Western Europe.
Did all that additional tax revenue lead to lower deficits and less debt?
Nope, the opposite happened. European politicians spent every penny of the new tax revenue (much of it from value-added taxes). And then they added even more spending financed by additional borrowing.
To be fair, one could argue that this was an argument for the view of “Don’t Feed the Beast” rather than “Starve the Beast,” but it nonetheless shows that more money in the hands of politicians simply means more spending. And more red ink.
P.S. I had a discussion last year with Gene Tunny about the issue of “state capacity libertarianism.”
Friedman & Sowell: Should Our School System Be Privatized?
Regular readers know that the two things that get me most excited are the Georgia Bulldogs and the fight against a bloated public sector that is ineffective in the best of circumstances and more often than not is a threat to our freedoms.
So you will not be surprised to know that I am delighted that former Georgia Bulldog star Fran Tarkenton (who also happened to play in the NFL) has a superb piece in the Wall Street Journal ripping apart the inherent inefficiency of government-run monopoly schools.
Here is the key passage.
Imagine the National Football League in an alternate reality. Each player’s salary is based on how long he’s been in the league. It’s about tenure, not talent. The same scale is used for every player, no matter whether he’s an All-Pro quarterback or the last man on the roster. For every year a player’s been in this NFL, he gets a bump in pay. The only difference between Tom Brady and the worst player in the league is a few years of step increases. And if a player makes it through his third season, he can never be cut from the roster until he chooses to retire, except in the most extreme cases of misconduct. Let’s face the truth about this alternate reality: The on-field product would steadily decline. Why bother playing harder or better and risk getting hurt? No matter how much money was poured into the league, it wouldn’t get better. In fact, in many ways the disincentive to play harder or to try to stand out would be even stronger with more money. Of course, a few wild-eyed reformers might suggest the whole system was broken and needed revamping to reward better results, but the players union would refuse to budge and then demonize the reform advocates: “They hate football. They hate the players. They hate the fans.” The only thing that might get done would be building bigger, more expensive stadiums and installing more state-of-the-art technology. But that just wouldn’t help.
This sounds absurd, of course, but Mr. Tarkenton goes on to explain that this is precisely how government schools operate.
If you haven’t figured it out yet, the NFL in this alternate reality is the real-life American public education system. Teachers’ salaries have no relation to whether teachers are actually good at their job—excellence isn’t rewarded, and neither is extra effort. Pay is almost solely determined by how many years they’ve been teaching. That’s it. After a teacher earns tenure, which is often essentially automatic, firing him or her becomes almost impossible, no matter how bad the performance might be. And if you criticize the system, you’re demonized for hating teachers and not believing in our nation’s children. Inflation-adjusted spending per student in the United States has nearly tripled since 1970. According to the Organization for Economic Cooperation and Development, we spend more per student than any nation except Switzerland, with only middling results to show for it.
Actually, I will disagree with the last sentence of this excerpt. We’re not even getting “middling results.” Here’s a chart from an earlier post showing that we’ve gotten more bureaucracy and more spending but no improvement over the past 40 years.
Milton Friedman’s FREE TO CHOOSE “The Tyranny of Control” Transcript and Video (60 Minutes) In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
Open letter to President Obama (Part 654) (Emailed to White House on July 22, 2013) 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 […]
Open letter to President Obama (Part 650) (Emailed to White House on July 22, 2013) 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 […]
When the Commerce Department announced in February that the United States had a record trade deficit for 2021, I shared this video to help make the point that those trade numbers were that year’s “least important economic news.”
When Americans use dollars to buy goods from other nations, those dollars are only valuable to foreigners because they can use them to buy things from America.
In many cases, they buy American goods and services. But they also use many of those dollars to invest in the U.S. economy.
That’s generally a positive thing. It’s a vote of confidence about America’s economic future.
Jeff Jacoby of the Boston Globe shares my viewpoint. He recently opined on this issue, echoing the important insight about the link between trade flows and investment flows.
The US trade deficit hit an all-time high in March, widening to nearly $110 billion as the nation imported considerably more goods than it exported. That can’t be good, right? Actually, it’s fine. …It’s not an indication of actual economic weakness. …Quite the contrary: All things being equal, imports are usually evidence of economic vitality and success.…The dollars Americans spend on imports aren’t “lost.” They are exchanged for desirable and affordable goods, services, parts, and commodities that strengthen Americans’ economy while elevating their US lifestyle. Better still, those dollars then come back to the United States, where they are used to invest in American assets or buy American exports, creating even more value and putting even more Americans to work. …a trade “deficit” isn’t a debt we owe. It is an accounting entry that tells us how much more we were enriched by foreigners than they were by us. ..the US economy has some real problems. Happily, the trade deficit isn’t one of them. Imports are good. And more imports? They’re good too.
This does not mean, however, that everyone is a winner.
As I explain in this video, jobs are destroyed when there is trade between nations. But I also point out that jobs are destroyed by trade inside a nation’s borders.
That’s bad news for workers in sectors that are dying (such as typewriter makers after personal computers hit the market).
John Cowperthwaite deserves a lot of credit for Hong Kong’s prosperity. As a British appointee, he took a hands-off policy and allowed the colony’s economy to thrive. He didn’t even want the government to collect statistics since that would give interventionists data that might be used to argue for interventionism.
On the other hand, there are some statistics that cause a lot of mischief.
I’ve argued, for instance, that we should focus on how national prosperity is generated (gross domestic income) rather than how it is allocated (gross domestic product). If we changed the focus to GDI, the debate would more naturally focus on pro-growth policies to boost wages, small business income, and corporate profits rather than the misguided policies (such asKeynesian economics) that are enabled by a focus on GDP.
That being said, there’s a good argument that the worst government statistic is the “trade deficit.”
This is a very destructive piece of data because people instinctively assume a “deficit” is bad. Yet I have a trade deficit every year with my local grocery store. I’m always buying things from them and they never buy anything from me. Does that mean I’m a “loser”? Of course not. Voluntary exchange, by definition, means that both parties gain from any transaction. And this principle applies when voluntary exchange occurs across national borders.
Moreover, people oftentimes don’t realize that the necessary and automatic flip side of a “trade deficit” is a “capital surplus.” In other words, when foreign companies acquire dollars by selling to American consumers, they frequently decide that investing in the American economy is the best use of that money. And the huge amount of investment from overseas is a sign of comparative prosperity and vitality, not a sign of weakness.
And for any readers who nonetheless think protectionism might be a good idea, I challenge them to answer these eight questions.
I’m confident that both Donald Trump and Bernie Sanders wouldn’t be able to successfully answer any of them. Yet it appears they’ve gained some traction with voters by calling for protectionism.
That’s quite unfortunate. If the pro-trade policy consensus in America breaks down, that would create dangerous opportunities for politicians and bureaucrats to rig the game in favor of special interests while also imposing higher costs of taxpayers and consumers.
Let’s dig into the issue.
In a column for the Wall Street Journal, Mort Kondracke and Matthew Slaughter combine to produce a strong defense of trade.
…the four leading presidential candidates…oppose the U.S. ratifying the Trans-Pacific Partnership. All four demonize trade the same way. …Where is the leader with the courage to tell the truth? To say that trade made this nation great, and that trade barriers will destroy far more jobs than they can ever “save.” …America’s exporters and importers are among the country’s most dynamic companies, paying their workers about 15%-20% more than workers earn elsewhere in the economy. The overall gains are large. Trade and related activities—spurred by accords such as the North American Free Trade Agreement, or Nafta, have boosted annual U.S. income today by about 10 percentage points of GDP relative to what it would have been otherwise. This translates into an aggregate gain of about $1.8 trillion in 2015—thousands of dollars per U.S. household every year. …creative destruction—the movement of people and capital from weaker businesses to stronger ones and new opportunities—is how many of the gains from trade arise. …For generations, American presidents of both parties have spoken about the benefits of trade. “Economic isolation and political leadership are wholly incompatible,” warned John Kennedy. “A creative, competitive America is the answer to a changing world,” said Ronald Reagan. “We should always remember: protectionism is destructionism.”
By the way, I think Kondracke and Slaughter paint with too broad a brush. Both Cruz and Clinton are far less protectionist than Trump and Sanders. Though the authors are correct in noting that they’ve been reluctant (especially in the case of Clinton) to vigorously defend free trade.
There are of course major difference between the insidious Trump and buffoonish Sanders. …Still, the real selling point of each boils down to one issue: In the indecorous language of the pollster, Pat Caddell, Americans feel “they have been screwed” by free trade. …free trade is in retreat as protectionism becomes the common thread across the both political parties. It is as though the economic unwisdom of the 1930 Smoot-Hawley Tariff Act is back.
Richard makes a very important point that politicians often support protectionism in an attempt to hide the damage they do with other misguided policies.
Free trade offers an uncompromising indictment of, and a powerful corrective for, America’s unsound economic policies. …the reason that local businesses outsource from the United States is the same reason why foreign businesses are reluctant to expand operations here. Our regulatory and labor environment is hostile to economic growth and there are no signs of that abating anytime soon. …the steady decline in freedom and productivity inside the United States has continued apace. Ironically, the strong likelihood that the next American president will expand protectionist practices will only make matters worse: firms, both foreign and domestic, are more reluctant to invest in the United States…free trade gives the federal government and the individual states strong incentives to clean up their act so that they can once again be attractive to foreign investment.
My buddy Ross Kaminsky explains in the American Spectator that free trade is good because it is part of the competitive process that boosts living standards, particularly for the poor.
…in trade, as in any economic endeavor, there are losers in the short run. Capitalism is, after all, fundamentally a system of creative destruction. But if there is any area of agreement among economists of all political stripes…it is that free trade provides large net benefits to the societies that engage in it, even if other nations do not lower trade barriers to the same degree. Furthermore, the benefits of trade accrue in large measure to the lower economic echelons of society in an extension of Schumpeter’s profound observation that “the capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.”
And Ross echoes Richard Epstein’s point about the real problem being anti-growth policies that make America less competitive.
Trade is complex and like all complex things politicians will dumb it down in a way that benefits them, generally by lying to the public and creating a frothy anger against those “damn furiners” instead of pointing fingers at the true culprits: unions, regulators, and politicians of all stripes.
Ross and Richard are right. If politicians really want more jobs in America, they should be adopting policies to boost U.S. competitiveness.
In an editorial, the Wall Street Journal debunks Donald Trump’s protectionist tirade against China.
The real-estate developer recently added Japan to his most-wanted list of job killers… “They’re killing us. You know what we sell to Japan? Practically nothing.” Is $116 billion worth of annual goods and services exports to Japan practically nothing? Japan is the fourth largest U.S. export market in goods after Canada, Mexico and China. …The best way to boost American exports is to remove trade barriers with new trade agreements. U.S. farm producers would particularly benefit from the Trans-Pacific Partnership with Japan and 10 other countries. Japanese tariffs on beef would fall to 9% in the 16th year of the deal from 38.5% while the 20% tariff on ground pork would be eliminated in six years. Japan’s 21.3% levy on poultry and eggs would be abolished in six to 13 years.
Writing for the Washington Post, David Ignatius defends trade in general and trade agreements in particular.
…the revolt against free trade that has captured both parties could do the most long-term damage. …there’s strong evidence that trade has benefited the U.S. economy and created whole new industries in which the United States is dominant. That’s the essence of the “creative destruction” that makes a market economy so potent: It relentlessly pushes innovation and change. …The bipartisan protectionism of Trump and Sanders has focused its attacks on the Trans-Pacific Partnership… Robert Z. Lawrence and Tyler Moran estimate that between 2017 and 2026, when TPP would have its major impact, the costs to displaced workers would be 6 percent of the benefits to the economy — or an 18-to-1 benefit-to-cost ratio. …David Autor, David Dorn and Gordon Hanson…noted that the pact would promote trade in knowledge industries where the United States has a big advantage and that “killing the TPP would do little to bring factory work back to America.”
Ignatius also makes a very important observation that protectionists want us to be scared of nations that have much bigger problems than the United States.
Trump, the businessman, seems weirdly out of touch with real economic trends. He speaks of Japan as though it were an economic powerhouse, when it has actually suffered a two-decades-long slump; he describes a surging China, when the numbers show its growth is sagging.
Let’s close with some good news. Politicians may be engaging in anti-trade demagoguery, and there may be some voters that are motivated by hostility to voluntary exchange, but that doesn’t mean the protectionists have won.
Indeed, pro-trade sentiment has never been higher by some measures. Here’s some amazingly positive polling data from Gallup.
P.S. One final point. The growing burden of government spending and taxation since World War II have been very unfortunate, but the good news is that we have strong evidence that the economic damage of worsening fiscal policy has been offset by the economic gains from trade liberalization. It would be tragic to see that reversed.
Milton Friedman’s FREE TO CHOOSE “The Tyranny of Control” Transcript and Video (60 Minutes) In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
In 1980 I read the book FREE TO CHOOSE by Milton Friedman and it really enlightened me a tremendous amount. I suggest checking out these episodes and transcripts of Milton Friedman’s film series FREE TO CHOOSE: “The Failure of Socialism” and “What is wrong with our schools?” and “Created Equal” and From Cradle to Grave, […]
Open letter to President Obama (Part 654) (Emailed to White House on July 22, 2013) 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 […]
Open letter to President Obama (Part 650) (Emailed to White House on July 22, 2013) 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 […]
But let’s set that aside and focus instead on a jaw-dropping claim from the White House.
Even though all of his major initiatives have increased red ink, he is patting himself on the backfor lower deficits.
For what it is worth, Biden’s claim is semi-accurate. It is true that budget deficits are temporarily falling.
But not because of him. Instead, red ink is falling because there was massive, one-time, multi-trillion dollar emergency spending for the COVID pandemic in 2020. That spending began to wind down in 2021 and it has mostly dissipated this year, so of course deficits have fallen.
For Biden to take credit for this drop would be akin to Truman taking credit for the big drop in red ink after World War II ended.
Eric Boehm of Reason wrote a column that debunks Biden’s ludicrous claim.
…this year’s budget deficit is forecasted to be the third or fourth-largest in American history—but President Joe Biden claims…his administration is overseeing a period of fiscal austerity. …Here are some words that actually tumbled out of the president’s mouth at a press conference… “We’re on track to cut the federal deficit by another $1.5 trillion by the end of this fiscal year. …on top of us having a $350 billion drop in the deficit last year, my first year as president,” Biden continued.…Those facts, however, exclude a few key details. …Biden took office the year after the budget deficit hit previously unimaginable highs due to a completely unprecedented spending binge triggered by a once-in-a-generation public health disaster. …if you look at the actual budgetary baselines published by the Congressional Budget Office—that is, the ongoing amount of annual federal spending absent any emergency stimulus bills like the ones passed on several occasions during the height of the pandemic—Biden has overseen a noticeable increase in the deficit above the pre-pandemic baseline. According to the Committee for a Responsible Federal Budget, a fiscal watchdog group that advocates for lower deficits, Biden’s policies have added about $2.5 trillion to the deficit over the next 10 years.
Brian Riedl is now with the Manhattan Institute, but we used to work together earlier this century at the Heritage Foundation. One of his admirable traits is that he hasn’t lost the ability to be outraged.
That comes through in his tweet about Biden’s supposed accomplishment.
By the way, I’m not making a partisan point. I have no doubt Trump would have done the same thing.
President: ‘Bringing down the deficit is one way to ease inflationary pressures’
President Joe Biden speaks Wednesday about the economy at the White House. Also pictured (L-R) are Shalanda Young, director of the Office of Management and Budget; Cecilia Rouse, chair of the Council of Economic Advisers; and Brian Deese, director of the National Economic Council.
AFP/GETTY IMAGES
President Joe Biden on Wednesday delivered an economic speech that highlighted cuts to the federal deficit, even as some watchdogs have criticized his rhetoric around reducing red ink.
“The bottom line is the deficit went up every year under my predecessor, before the pandemic and during the pandemic, and it’s gone down both years since I’ve been here. Period. They’re the facts,” Biden said at the White House.
“Why is it important? Because bringing down the deficit is one way to ease inflationary pressures.”
The president has been talking up fiscal deficit reduction as a way to win over a key Democratic senator — West Virginia’s Joe Manchin — who has blocked Biden’s Build Back Better spending plan and wants to see Washington focused on closing the budget gap and fighting high inflation.
Biden’s rhetoric on eliminating red ink has drawn flak from the Committee for a Responsible Federal Budget, a nonpartisan watchdog organization.
“While President Biden’s Fiscal Year (FY) 2023 budget calls for $1.05 trillion of welcomed deficit reduction, the administration has largely been focused on taking credit for the expected $1.3 trillion fall in the deficit between FY 2021 and 2022,” the organization said in a blog post last month.
“The administration touting this victory is highly misleading; deficits are falling mainly because COVID relief is ending, and deficits will remain high even after this decline.”
Biden on Thursday said his administration revealed this week that it’s on track to cut the federal deficit by $1.5 trillion by the end of the current fiscal year, adding that it’s “the biggest decline in a single year ever in American history.”
The president’s remarks come after his Treasury Department on Monday surprised observers by announcing that it plans to pay down $26 billion in debt in the second quarter.
“For the first time since 2016, the Treasury Department is planning to pay down the national debt issued to the public this quarter,” he said on Wednesday. “For all the talk Republicans make about deficits, it didn’t happen a single quarter under my predecessor, not once.”
Biden’s speech initially had been planned for 2 p.m. Eastern, but the White House moved up the scheduled time for his remarks by three hours.
President Biden c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear Mr. President,
Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.
“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!
Washington Could Learn a Lot from a Drug Addict
Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?
Making more dependent on government is not the way to go!!
Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.
Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.
Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.
Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.
It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.
______________
Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”
How sad it is that liberals just don’t get this reality.
While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”
Alexander Fraser Tytler, Lord Woodhouselee(15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”
[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor.— TGW]
To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.
[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]
_______
Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.
_____________
_________
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
We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]
We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with everyone else that keeps spending our money. I am glad that at least […]
Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]
Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]
Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]
Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]
Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]
Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]
Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]
I have been writing President Obama letters and have not received a personal response yet. (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]
Today, we have more bad news for the Prairie State.…Meantime, Democrats in Springfield continue to threaten businesses and citizens with higher taxes… It’s no wonder so many companies and people are leaving, and mostly to low-tax states. …In 2020, $2.4 billion in net adjusted gross income moved to Florida from Illinois, about $298,000 per tax filer. …Mr. Griffin has spent tens of millions of his personal fortune trying to rescue Illinois from bad progressive governance. Maybe he figures it’s time to cut his losses.
is not the best way to keep those residents in your state… Over the course of the last decade, Illinois lost more than a quarter-million people…not even California…has seen Illinois’ population loss. …Government leaders have responded not with better fiscal management (the state’s powerful unions blocked pension reforms), but with more taxes and fees, even as residents leave.
Just as it lost people and businesses last decade.
about people and businesses fleeing to Illinois.But last week, when the heavy-equipment manufacturer Caterpillar said it was moving its headquarters to Texas, it felt more like a bulldozer ramming into the news. …If you’re an Illinois business owner or resident, as I am, the economics of staying are tough and the enticements to move away are many. …According to the U.S. Census Bureau, last year the state had the third-largest loss of residents due to domestic migration in the nation (-122,460), trailing only California and New York.
But the chances of pro-growth reform are effectively zero. The governor is a hard-core leftist (as well as a hypocrite) and the state legislature is controlled by government employee unions.
No wonder the Lone Star State is growing faster and creating more jobs.
Two great Americans
“The active aspect of the definition inherently implies the ongoing nature of an incident, and thus the potential for the response to affect the outcome, whereas a mass killing is defined as three or more killings in a single incident,” the FBI said in a Monday 
The Daily Hatch 