Politico reports here that a group of celebrities, including former Baptist pastor Mike Huckabee, shouted a four-letter obscenity for cameras in a promotion to speak up against famine. Bleeps and labels to cover mouths obscure the actual word.
In the PSA, our celebrity supporters shout out one four letter word that the majority of viewers will find offensive, in order to shine a light on something only a minority seems to be offended by. I know the tone is a bit rough for ONE — that’s no accident. If it feels like a punch in the face, then good — mission accomplished. It’s time for a wakeup call and here’s the alarm. Love it? Great. Hate it? OK. Just don’t ignore it.
I’m not sure I believe Huck did precisely as described.
Economic freedom and free trade need to be major pieces of the puzzle to solve this problem but President Obama and Bono do not get that.
Cato recently held a book launch for South African development expert Greg Mills (you can pre-order at Amazon). This is a very smart book by a man who has spent his professional life in the thick of the problem (bad governments making bad policy choices).
Economic growth does not require a secret formula. While countries from Asia to Latin America have emerged from poverty, Africa has failed to realize its potential in the 50 years since independence. Greg Mills, the former director of the South African Institute of International Affairs and one of South Africa’s most respected commentators, confronts the myths surrounding African development. He shows that African poverty was not caused by poor infrastructure, lack of market access or insufficient financial resources. Instead, the main reason Africans are poor is because their leaders have made bad policy choices. Please join us to hear why a growing number of African opinion makers and ordinary citizens believe that to emerge from poverty, Africa must embrace a far greater degree of political and economic freedom.
I recommend the podcast of the event (download MP3). Excellent comments by Marian L. Tupy, a policy analyst with the Center for Global Liberty and Prosperity.
One of my favorite development economists wrote the lead blurb
“Poverty is now optional” is Greg Mills’ invigorating message’, Paul Collier, Oxford University, Author of The Bottom Billion and The Plundered Planet
African poverty has been optional for fifty years — just keep in mind that the African elites do just fine under the status quo. And so do the NGOs, who effectively get a commission cut of the western aid budgets (as does the consulting industry housed around the DC beltway).
Good job Cato! Now, if we can just inject some sanity into the NGOs and OECD aid agencies. The billowing aid continues to insulate the African leaders from the consequences of their policies (and of course insulates them from their own populations).
On aid, I was pleased to hear Greg Mills respond to questions, with, paraphrasing:
Obama said his Africa policy was to “double the aid”. In fact that is a clear signal that there is no Africa policy. An effective, Africa policy is far more nuanced and complex than “double the aid”. What is the point of aid if you do not have tools for measuring the effectiveness of that aid?
While we are at it, let’s measure the effective of NGOs! I would be perfectly happy to have the organization that I run measured. Also, measure the effectiveness of consultants.
(…) The average age of African leaders is 75. The average age of Africans is 25. The numbers for Europe are about 55, 45. I am stupified by how passive African electorates are. How long would Robert Mugabe have lasted in Serbia?
A new video from the Center for Freedom and Prosperity gives four reasons why big government is bad fiscal policy.
I particularly like the explanation of how government spending undermines growth by diverting labor and capital from the productive sector of the economy.
Some cynics, though, say that it is futile to make arguments for good policy. They claim that politicians make bad fiscal decisions because of short-term considerations such as vote buying and raising campaign cash and that they don’t care about the consequences. There’s a lot of truth to this “public choice” analysis, but I don’t think it explains everything. Maybe I’m an optimist, but I think we would have better fiscal policy if more lawmakers, journalists, academics, and others grasped the common-sense arguments presented in this video.
This Economics 101 video from the Center for Freedom and Prosperity explains that excessive government spending undermines prosperity by diverting resources from the productive sector of the economy. Moreover, the two main ways of financing government — taxes and borrowing — cause additional economic damage. www.freedomandprosperity.org
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And even if the cynics are right, we are more likely to have good policy if the American people more fully understand the damaging impact of excessive government. This is because politicians almost always will do what is necessary to stay in office. So if they think the American people are upset about wasteful spending and paying close attention, the politicians will be less likely to upset voters by funneling money to special interests.
This article appeared in Forbes on October 3, 2011
The desperate search for an acceptable Republican Party presidential candidate continues. Republican leaders apparently are pushing New Jersey Gov. Chris Christie, who previously said no, to jump into the race.
The GOP’s frustration is palpable. Mitt Romney has been running for four years but generates little enthusiasm. Rick Perry was an instant front-runner before losing much of his support after unimpressive debate performances. Michelle Bachmann briefly streaked across the political firmament but now barely registers in the polls. Newt Gingrich committed political seppuku shortly after announcing his candidacy. Ron Paul’s support is fervent but limited.
However, the real Republican problem is positions, not candidates.
The Republican Party cheerfully ran up the national debt before surrendering the keys to Capitol Hill and the White House. President George W. Bush’s promiscuous war-making cost the U.S. thousands of lives and hundreds of billions of dollars, while making Americans less secure. The GOP centralized more power in Washington. Republican lawmakers managed to turn laudable opposition to tax hikes into a deplorable defense of the status quo.
Most of the GOP presidential candidates offer little new. Mitt Romney, the ultimate political weathervane, implemented ObamaCare in Massachusetts before there was ObamaCare. He now fervently defends Social Security, despite its design as a public Ponzi scheme. Gov. Perry talks of domestic budget cuts but on foreign policy appears to be Bush-lite, yet another hawk disconnected from reality. The sharpest dissent from big government conservatism comes from the candidates least likely to win the nomination: Rep. Paul, former Utah Gov. Jon Huntsman, and former New Mexico governor Gary Johnson, who has been excluded from most of the debates.
President Barack Obama obviously is vulnerable, as well he should be. The problem is not that he is responsible for all of America’s economic woes — no president “runs” the $15 trillion U.S. economy. But this president has no solution for slow growth and high unemployment other than spending more money, increasing the deficit, and running up the debt.
Unfortunately for the Republicans, simply denouncing President Obama for every ill known to man may not lead to victory. Voters dislike much current GOP orthodoxy. President Obama could win an election which turns into competitive political demonization and personal destruction.
Republicans should offer a positive agenda while addressing the party’s past failings. First, they should explain that current budget policy is unsustainable on both a short- and a long-term basis. Economist Larry Kotlikoff figures that America’s real public debt is $211 trillion, 15 times the nominal national debt. Public finance in states like California already looks a lot like that in Greece.
Unless Americans want to turn their entire incomes over to government, public spending must be cut, and cut sharply. And it must be cut across-the-board.
However, to regain lost credibility GOP politicians should lead with proposals to cut spending benefiting “their” interest groups. Corporate welfare should top any Republican Party list of budget cuts. Too often Republican apparatchiks have been pro-business rather than pro-free market, attacking financial transfers to the poor while endorsing subsidies for corporate America.
The GOP also needs to support significant reductions in military outlays. There is no more important responsibility for the U.S. government than protecting America. However, most of the Pentagon’s current activities have little to do with protecting America.
Instead, most U.S. forces currently defend prosperous, populous allies around the world. Europe has a larger GDP and population than America, yet continues to rely on Washington to provide most of NATO’s combat capability. Japan long had the world’s second largest economy but nevertheless relied on America for its protection. South Korea has 40 times the GDP of its northern adversary, but nearly 30,000 U.S. military personnel remain in the South, creating a “tripwire” for war.
Equally wasteful and far more costly in human terms have been nation-building exercises in Somalia, Bosnia, Kosovo, Iraq, Afghanistan, and more. Going to war in 2001 to punish the Taliban for hosting terrorist training camps made sense. Staying at war a decade later in an attempt to create a competent, honest centralized government in Kabul is foolish.
Also required is an honest discussion of Social Security’s and Medicare’s funding crises. Neither is financially sustainable and both risk triggering generational conflict. The longer Congress puts off addressing these issues the costlier will be any solution.
The GOP should reaffirm its opposition to tax hikes, but emphasize that taxes can be kept low only if outlays are reduced. Endless borrowing threatens a financial death spiral of increased debt, higher interest payments, slower economic growth, and lower investor confidence. The U.S. now is on the road to fiscal ruin.
Moreover, Republicans should endorse President Obama’s attack on special interest tax breaks. Not all tax preferences are equally bad, but the narrower the tax break the more it approaches a special interest subsidy. The GOP should push legislation that simultaneously kills dubious tax “loopholes” and reduces overall marginal tax rates. Republicans should similarly respond to tax proposals from President Obama or congressional Democrats. Rather than defend the undefendable, the GOP should challenge yet another form of corporate welfare.
With job creation at issue, Republicans should develop a list of regulations and taxes which interfere with a growing economy. Political candidates enjoy denouncing “over-regulation” in the abstract, but they would be more convincing if they targeted specific policies costing real jobs. The House GOP should follow the example of its earlier majority which held hearings on regulatory abuses.
Republicans should challenge politically popular public agencies. For instance, the government-sponsored enterprises Fannie Mae and Freddie Mac were at the epicenter of the housing and financial crises. The GOP rightly criticized Democrats for not including the two GSEs in last year’s financial “reform” bill. But so far House Republicans have done nothing to close Fannie and Freddie, which continue to lose money.
Deregulation should include proposals to make more market friendly controls which are necessary even in a free society. After all, few Americans want to breathe dirty air or swim in dirty water. And there is no simple market solution to such problems. But people don’t want to needlessly waste money and destroy jobs when cleaning up the environment.
The Republicans also should offer a more restrained foreign policy. Doing so is necessary to curtail military outlays — in effect, the defense budget is the price of a nation’s foreign policy, since the more Washington seeks to do in the world, the more military force it requires. So long as the U.S. government is determined to dominate every region of the globe against every power, it will have to spend as much on the military as the rest of the world combined. Indeed, real, inflation-adjusted military outlays have doubled over the last decade, and today are higher than at any point during the Cold War, Korean War, and Vietnam War.
But a more humble foreign policy also would be a better foreign policy. Rather than engage in social engineering abroad, Republican politicians should leave friendly states with responsibility for international problems. If there is a problem in the Balkans or North Africa, Europe should address it. Japan, South Korea, Australia, and other democratic nations should cooperate to restrain potential Chinese aggressiveness. Only the Afghans can create a sustainable political order, of whatever form, in Afghanistan.
The GOP should simultaneously support a globally engaged America and Americans. For instance, international cooperation can help meet humanitarian, environmental, and other problems which transcend national boundaries. Whatever U.S. policy toward illegal aliens, Americans should expand the legal immigration of entrepreneurial professionals.
Trade benefits Americans. Washington’s failure to ratify the free trade agreement with South Korea is beyond foolish. A commercial war with China would hurt Americans while poisoning the most important bilateral relationship of the 21st century.
Other issues also deserve attention — such as expanding educational opportunities for children stuck in poorly performing public schools. Even here, however, the GOP needs to break with recent Republican Party orthodoxy. President Bush and the Republican Congress centralized even more authority in Washington with the “No Child Left Behind” legislation.
Perhaps Chris Christie or some other late electoral entrant will revolutionize the GOP presidential sweepstakes. But without good ideas well-expressed, the GOP could still end up outside the White House looking in. The Republican Party deserves to win in 2012 only if it recognizes that it deserved to lose in 2008.
There is considerable academic research on the growth-maximizing level of government spending. Based on a good bit of research, I’m fairly confident that Cato’s Richard Rahn was the first to popularize this concept, so we are going to make him famous (sort of like Art Laffer) in this new video explaining that there is a spending version of the Laffer Curve and that it shows how government is far too large and that this means less prosperity.
(The signs are up on the buses in Little Rock now and the leader of the movement to put them up said on the radio today that he does not anticipate any physical actions against the signs by Christians. He noted that the Christians that he knows would never stoop to that level.)
Debate: Christianity vs Secular Humanism (1 of 14)
I personally know of many atheists who are very fine moral people who have a wonderful marriage and a great family life. I could go on and name a bunch of names. However, I will mention my good friend John George who passed away a couple of years ago after a battle with cancer.
He wrote a book published by Prometheus which was started by Paul Kurtz. Kurtz was the originator of the Humanist Manifesto II. I have corresponded in the past with him and I have found him to be a very kind man. I highly recommend his debate concerning humanism on the John Ankerberg Show. I have included clips of that show.
I do not question the fact that many atheists live moral lives. However, this idea that humanists and atheists can come up with a logical moral system that rules out murder is not realistic. Rationally they can not do it. Without God in the picture then you only have this world of time and chance. If evolution teaches us the survival of the fittest then why would “might makes right” ever be wrong?
The movie maker and atheist Woody Allen knows this best.
I am a big Woody Allen movie fan and no other movie better demonstrates man’s need for God more than Allen’s 1989 film Crimes and Misdemeanors. This film also brought up the view that Hitler believed that “might made right.” How can an atheist argue against that? Basically Woody Allen is attacking the weaknesses in his own agnostic point of view!! Take a look at the video clip below when he says in the absence of God, man has to do the right thing. What chance is there that will happen?
Crimes and Misdemeanors is about a eye doctor who hires a killer to murder his mistress because she continually threatens to blow the whistle on his past questionable, probably illegal, business activities. Afterward he is haunted by guilt. His Jewish father had taught him that God sees all and will surely punish the evildoer.
But the doctor’s crime is never discovered. Later in the film, Judah reflects on the conversation his father had with Judah’s unbelieving Aunt May during a Jewish Sedar dinner many years ago:
“Come on Sol, open your eyes. Six million Jews burned to death by the Nazi’s, and they got away with it because might makes right,” says Aunt May.
Sol replies, “May, how did they get away with it?”
Judah asks, “If a man kills, then what?”
Sol responds to his son, “Then in one way or another he will be punished.”
Aunt May comments, “I say if he can do it and get away with it and he chooses not to be bothered by the ethics, then he is home free.”
Judah’s final conclusion was that might did make right. He observed that one day, because of this conclusion, he woke up and the cloud of guilt was gone. He was, as his aunt said, “home free.”
The basic question Woody Allen is presenting to his own agnostic humanistic worldview is: If you really believe there is no God there to punish you in an afterlife, then why not murder if you can get away with it? The secular humanist worldview that modern man has adopted does not work in the real world that God has created. God “has planted eternity in the human heart…” (Ecclesiastes 3:11). This is a direct result of our God-given conscience. The apostle Paul said it best in Romans 1:19, “For that which is known about God is evident to them and made plain in their inner consciousness, because God has shown it to them” (Amplified Version).
Crimes and Misdemeanors (Woody Allen – 1989) – Final scenes
It’s no wonder, then, that one of Allen’s fellow humanists would comment, “Certain moral truths — such as do not kill, do not steal, and do not lie — do have a special status of being not just ‘mere opinion’ but bulwarks of humanitarian action. I have no intention of saying, ‘I think Hitler was wrong.’ Hitler WAS wrong.” (Gloria Leitner, “A Perspective on Belief,” The Humanist, May/June 1997, pp.38-39). Here Leitner is reasoning from her God-given conscience and not from humanist philosophy. It wasn’t long before she received criticism.
Humanist Abigail Ann Martin responded, “Neither am I an advocate of Hitler; however, by whose criteria is he evil?” (The Humanist, September/October 1997, p. 2.). Humanists don’t really have an intellectual basis for saying that Hitler was wrong, but their God-given conscience tells them that they are wrong on this issue.
Debate: Christianity vs Secular Humanism (11 of 14) (How to motivate people to be good without God?)
Debate: Christianity vs Secular Humanism (3 of 14)
Some people have suggested that God was responsible for evil in the world and that meant that he was responsible for 9/11. However, I wanted to make the simple point today that there must be an absolute standard to judge evil by and most atheists do not have that. Of course, Christians have the Bible. Today we […]
The Bible and Archaeology (1/5) The Bible maintains several characteristics that prove it is from God. One of those is the fact that the Bible is accurate in every one of its details. The field of archaeology brings to light this amazing accuracy. _________________________- I want to make two points today. 1. There is no […]
Debate: Christianity vs Secular Humanism (4 of 14) Paul Kurtz pictured above. August 11, 2011 on the Arkansas Times Blog many nonbelievers ranted about the requirement that an atheist group had to put down a $15,000 deposit in order to advertise the phrase “Are you good without God? Millions are.” One of the Arkansas Times […]
The Bible and Archaeology (1/5) The Bible maintains several characteristics that prove it is from God. One of those is the fact that the Bible is accurate in every one of its details. The field of archaeology brings to light this amazing accuracy. _________________________- I want to make two points today. 1. There is no […]
Debate: Christianity vs Secular Humanism (7 of 14) Paul Kurtz pictured above. August 11, 2011 on the Arkansas Times Blog many non believers ranted about the requirement that an atheist group had to put down a $15,000 deposit in order to advertise the phrase “Are you good without God? Millions are.” I personally know of […]
Debate: Christianity vs Secular Humanism (10 of 14) Paul Kurtz pictured above. August 11, 2011 on the Arkansas Times Blog many nonbelievers ranted about the requirement that an atheist group had to put down a $15,000 deposit in order to advertise the phrase “Are you good without God? Millions are.” I personally know of many […]
Debate: Christianity vs Secular Humanism (1 of 14) Paul Kurtz pictured above. August 11, 2011 on the Arkansas Times Blog many nonbelievers ranted about the requirement that an atheist group had to put down a $15,000 deposit in order to advertise the phrase “Are you good without God? Millions are.” I personally know of many […]
Paul Kurtz pictured above. Norma Bates noted on the Arkansas Times Blog yesterday The most common justification throughout history – the elephant in everybody’s living room – is religion. “God is on our side.” “We are the chosen people.” “God gave us this land.” “God said to — .” Judaism, Christianity, or that relative Johnny-come-lately […]
First, Lorne Michaels who runs Saturday Night Live observed that it is Republicans that are better at laughing at the jokes directed to them than the Democrats. Many times Democrats get offended.
Second, I laugh at all the jokes the same. I know that if a Republican is in charge in the White House then he is fair game. If there is something different about that president then the SNL people will have a field day with him. President Clinton with his womanizing ways gave SNL the most material though.
Here is a story on Lorne Michaels followed by a couple of my favorite skits:
Reckless spending increases under both Bush and Obama have resulted in unprecedented deficits. Congress will soon be forced to increase the nation’s debt limit by an astounding $1.8 trillion. Government borrowing has become such a big issue that some politicians are proposing a deficit reduction commission, which may mean they are like alcoholics trying for a self-imposed intervention.
But all this fretting about deficits and debt is misplaced. Government borrowing is a bad thing, of course, but this video explains that the real problem is excessive government spending.
Fixating on the deficit allows politicians to pull a bait and switch, since they can raise taxes, claim they are solving the problem, when all they are doing is replacing debt-financed spending with tax-financed spending. At best, that’s merely taking a different route to the wrong destination. The more likely result is that the tax increases will weaken the economy, further exacerbating America’s fiscal position.
While many people have a fairly good grasp of what inflation is, few really understand its fundamental cause. There are many popular scapegoats: labor unions, big business, spendthrift consumers, greed, and international forces. Dr. Friedman explains that the actual cause is a government that has exclusive control of the money supply.
Friedman says that the solution to inflation is well known among those who have the power to stop it: simply slow down the rate at which new money is printed. But government is one of the primary beneficiaries of inflation. By inflating the currency, tax revenues rise as families are pushed into higher income tax brackets. Thus, inflation transfers wealth and resources from the private to the public sector. In short, inflation is attractive to government because it is a way of increasing taxes without having to pass new legislation to raise tax rates. Inflation is in fact taxation without representation.
Wage and price controls are not the cure for inflation because they treat only the symptom (rising prices) and not the disease (monetary expansion). History records that such controls do not work; instead, they have perverse effects on both prices and economic growth and undermine the fundamental productivity of the economy. There is only one cure for inflation: slow the printing presses. But the cure produces the painful side effects of a temporary increase in unemployment and reduced economic growth. It takes considerable political courage to undergo the cure.
Friedman cites the example of Japan, which successfully underwent the cure in the mid-seventies but took five years to squeeze inflation out of the system. Inflation is a social disease that has the potential for destroying a free society if it is unchecked. Prolonged inflation undermines belief in the basic equity of the free market system because it tends to destroy the link between effort and reward. And it tears the social fabric because it divides society into winners and losers and sets group against group.
President Obama and other politicians are advocating higher taxes, with a particular emphasis on class-warfare taxes targeting the so-called rich. This Center for Freedom and Prosperity Foundation video explains why fiscal policy based on hate and envy is fundamentally misguided. For more information please visit our web page: www.freedomandprosperity.org.
Jeffrey A. Miron is Senior Lecturer and Director of Undergraduate Studies at Harvard University and Senior Fellow at the Cato Institute. Miron blogs at JeffreyMiron.com and is the author of Libertarianism, from A to Z.
What is the “fair” amount of taxation on high-income taxpayers?
To liberals, the answer is always “more.” Liberals view high income — meaning any income that exceeds their own — as the result of luck or anti-social behavior. Hence liberals believe “fairness” justifies government-imposed transfers from the rich to everyone else. Many conservatives accept this view implicitly. They oppose soak-the-rich policies because of concern over growth, but they do not dispute whether such policies are fair.
But high tax rates on the rich are not fair or desirable for any other reason; they are an expression of America’s worst instincts, and their adverse consequences go beyond their negatives for economic growth.
The liberal hatred of the rich is a minority view, not a widely shared American value.
Consider first the view that differences in income result from luck rather than hard work: some people are born with big trust funds or innate skill and talent, and these fortuitous differences explain much of why some people have higher incomes than others.
Never mind that such a characterization is grossly incomplete. Luck undoubtedly explains some income differences, but this is not the whole story. Many trust fund babies have squandered their wealth, and inborn skill or talent means little unless combined with hard work.
But even if all income differences reflect luck, why are government-imposed “corrections” fair? The fact that liberals assert this does not make it true, any more than assertions to the contrary make it false. Fairness is an ill-defined, infinitely malleable concept, readily tailored to suit the ends of those asserting fairness, independent of facts or reason.
Worse, if liberals can assert a right to the wealth of the rich, why cannot others assert the right to similar transfers, such as from blacks to whites, Catholics to Protestants, or Sunni to Shia? Government coercion based on one group’s view of fairness is a first step toward arbitrary transfers of all kinds.
Now consider the claim that income differences result from illegal, unethical, or otherwise inappropriate behavior. This claim has an element of truth: some wealth results from illegal acts, and policies that punish such acts are appropriate.
But most inappropriate wealth accumulations results from bad government policies: those that restrict competition, enable crony capitalism, and hand large tax breaks to politically connected interest groups. These differences in wealth are a social ill, but the right response is removing the policies that promote them, not targeting everyone with high income.
The claim that soaking the rich is fair, therefore, has no basis in logic or in generating desirable outcomes; instead, it represents envy and hatred.
Why do liberals hate the rich? Perhaps because liberals were the “smart” but nerdy and socially awkward kids in high school, the ones who aced the SATs but did not excel at sports and rarely got asked to the prom. Some of their “dumber” classmates, meanwhile, went on to make more money, marry better-looking spouses, and have more fun.
Liberals find all this unjust because it rekindles their emotional insecurities from long ago. They do not have the honesty to accept that those with less SAT smarts might have other skills that the marketplace values. Instead, they resent wealth and convince themselves that large financial gains are ill-gotten.
Jeffrey A. Miron is Senior Lecturer and Director of Undergraduate Studies at Harvard University and Senior Fellow at the Cato Institute. Miron blogs at JeffreyMiron.com and is the author of Libertarianism, from A to Z.
The liberal views on fairness and redistribution are far more defensible, of course, when it comes to providing for the truly needy. Reasonable people can criticize the structure of current anti-poverty programs, or argue that the system is overly generous, or suggest that private charity would be more effective at caring for the least vulnerable.
The desire to help the poor, however, represents a generous instinct: giving to those in desperate situations, where bad luck undoubtedly plays a major role. Soaking the rich is a selfish instinct, one that undermines good will generally.
And most Americans share this perspective. They are enthusiastic about public and private attempt to help the poor, but they do not agree that soaking the rich is fair. That is why U.S. policy has rarely embraced punitive income taxation or an aggressive estate tax. Instead, Americans are happy to celebrate well-earned success. The liberal hatred of the rich is a minority view, not a widely shared American value.
For America to restore its economic greatness, it must put aside the liberal hatred of the rich and embrace anew its deeply held respect for success. If it does, America will have enough for everyone.
President Obama and other politicians are advocating higher taxes, with a particular emphasis on class-warfare taxes targeting the so-called rich. This Center for Freedom and Prosperity Foundation video explains why fiscal policy based on hate and envy is fundamentally misguided. For more information please visit our web page: www.freedomandprosperity.org.
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I was glad to hear that John Brummett was going to take place in a discussion with Charlie Collins in Fayetteville last Saturday. Sounds like some good points came out of it.
This forum lasted maybe 90 minutes. I can summarize as follows:
—The two of us varyingly left of center, an economics professor and labor historian named Michael Pierce and I, believe government has the responsibility and right to tax the top margins of high incomes at a higher rate and to spend for stimulus on the demand side to prime the pump of what is an otherwise dangerously idling economy. We find alarming and unsustainable the growing gap between the few rich and the many poor.
—The two wrong of center (or right, if you insist), Charlie Collins and affable local pizza mogul Rolf Wilkin, believe the economy will get better from the supply side. They believe it will do so by its own devices through the glories and innovations of the great American marketplace, but only if the government will cut taxes and reduce regulation. They believe the nation can best address the wealth gap by letting the marketplace work its natural and uninhibited magic.
Let me address a few points where Brummett misses the boat.
1. No where in the world is the wealth gap smaller than in the USA. It is true that our form of government has allowed even the poorest of our citizens the opportunity to advance in the income to the top. Countries that have limited freedoms have the poorest people for the most part and the largest wealth gap.
2. Cutting down on regulations is the way to go. Need I say more on this. Go into business for yourself and then write a paper on it.
Jim Powell, a senior fellow at the Cato Institute, is the author of FDR’s Folly, Wilson’s War, Bully Boy, The Triumph of Liberty and other books.
Added to cato.org on September 9, 2011
This article appeared on Forbes.com on September 8, 2011.
Soak-the-rich taxes have a way of becoming people’s taxes, soaking those who never expected to pay.
This has been true from the very beginning. The first U.S. income tax was passed in 1861 to help pay the Union’s Civil War costs. Western farmers had little cash, so they favored an income tax that wouldn’t affect them. Initially the Civil War income tax was 3 percent of income over $800. Since there weren’t enough people making over $800 to finance war spending, the income tax was revised to include everyone making as little as $600, and the rate was nearly doubled.
This income tax ended in 1872, but farmers hoped to revive it so they could push the cost of government on somebody else. Another income tax was passed in 1894, and 99-9/10ths percent of the 65 million people in the United States paid nothing. A lyrical Missouri congressman exulted: “passage of the bill will mark the dawn of a brighter day, with more sunshine, more of the songs of birds, more of the sweetest music, the laughter of children well fed, well clothed, well housed.” Jubilation was short-lived, when the income tax was struck down by the U.S. Supreme Court.
The Spanish-American War (1898) spurred federal officials to scramble for more revenue. Progressives began dreaming about how to revive the income tax. Eventually, they decided their best option was the long process of amending the Constitution. In December 1906, President Theodore Roosevelt cheered them on, declaring that “there is every reason why, when next our system of taxation is revised, the National Government should impose a graduated inheritance tax, and, if possible, a graduated income tax.” It wasn’t clear what would be done with revenue generated by an income tax, since no country posed a military threat to the United States, and big-time social spending was many years away.
Following ratification by three-quarters of the states, Congress passed an income tax bill, and in 1913, President Woodrow Wilson signed it. Initially, the rates were low, and a reported 99 percent of the U.S. population paid nothing, presumably a key reason why people clamored for it.
But as Wilson maneuvered the United States into World War I, there were higher taxes for everyone. By 1918, the top rate hit 77 percent. “Never before, in the annals of civilization,” noted Columbia historian Edwin Seligman, “has any attempt been made to take that much of a man’s income by taxation.” A lot of ordinary folks found they were subject to the income tax, too.
Ordinary folks were soaked again during the New Deal years (1933-1940) when federal spending doubled. True, President Franklin Delano Roosevelt seemed to be soaking-the-rich when he raised income tax rates on job creators whom he denounced as “economic royalists.”
Yet only about 5 percent of the population paid federal income taxes. The biggest source of federal revenue throughout the New Deal was the excise tax on beer, cigarettes, soft drinks, chewing gum, radios and other cheap pleasures enjoyed disproportionately by middle class and poor people. Until 1936, the federal excise tax generated more revenue than the federal personal income tax and the federal corporate income tax combined. Moreover, New Deal subsidies for big farmers were financed by forcing the three quarters of Americans who weren’t farmers to pay higher food prices. The New Deal was mainly paid for by the middle class and the poor.
The Revenue Act of 1942, amidst World War II, doubled the tax base and clearly made the personal income tax a people’s tax — the biggest source of federal revenue. Although the income tax had been sold to soak-the-rich and give everyone else something for nothing, ordinary folks faced a 23 percent rate on income up to $2,000, plus the headache of maintaining detailed records, filling out forms, dealing with inquisitorial audits and possible seizures.
Soak-the-rich taxes are for suckers. President Obama, like so many politicians who came before, is singing the happy song that only millionaires and billionaires will have to pay. But runaway spending — whether because of war or entitlement programs — drives government to extract revenue from people with much lower incomes, like the nearly half the population that pays no federal income tax now. The violence in Europe suggests they will be shocked and outraged when that happens.
The Daily Hatch 