Blaise Pascal, Penseé 347: “Man is but a reed, the most feeble thing in nature; but he is a thinking reed. The entire universe need not arm itself to crush him. A vapor, a drop of water suffices to kill him. But, if the universe were to crush him, man would still be more noble than that which killed him, because he knows that he dies and the advantage which the universe has over him; the universe knows nothing of this. All our dignity consists, then, in thought. By it we must elevate ourselves, and not by space and time which we cannot fill. Let us endeavor, then, to think well; this is the principle of morality.”
Tuesday, September 25, 2012
It started when she asked me an very straightforward question about the Romney "47%" gaffe. She said, "Is it really true that 47% of Americans pay no taxes?" She clearly found this to be astonishing. Luckily, I'd been blogging about this stuff, so I didn't feel as uninformed as usual. Yes, that's true, I said.
Well, what's their income? she asked.
Duh. I didn't know, but I did make a guess that turned out to be fairly accurate. I said, "I'm not sure, but I'd guess around $35,000 or under."
Now, that turned out to be about right. 83% of nontaxable returns are filed by people with incomes of $30,000 or less. (But there are some people who make a lot of money who pay no tax; see the figures in this USA Today article: Who doesn't pay taxes? )
She was again surprised. "You mean people make that much money and pay nothing?!"
The conversation went from there to what poverty means in the United States versus what poverty means in China. For instance, she couldn't fathom why Chicago School teachers would think they had a moral right to higher pay.
China's per capita income is about $5,400 dollars; the per capita income of the United States is about $48,400, according to IMF figures for 2010 to 2011. This, of course, doesn't give us the range. People in China, however, are happy to get a job at $5 an hour.
My Chinese friend is a very courteous person and did not say that the citizens of the United States had lost touch with reality. So I said it, and then she agreed. "Most poor people in the United States would be considered wealthy in China," she said. (She's not a new-comer to the United States, by the way. She has spent years here, and is a professor at Rice University.)
How wealthy is someone below the federal poverty line in the United States? see this digest of census information from the Heritage Foundation: What is Poverty in the United States
Here's the Abstract for the Heritage study: "For decades, the U.S. Census Bureau has reported that over 30 million Americans were living in “poverty,” but the bureau’s definition of poverty differs widely from that held by most Americans. In fact, other government surveys show that most of the persons whom the government defines as “in poverty” are not poor in any ordinary sense of the term. The overwhelming majority of the poor have air conditioning, cable TV, and a host of other modern amenities. They are well housed, have an adequate and reasonably steady supply of food, and have met their other basic needs, including medical care. Some poor Americans do experience significant hardships, including temporary food shortages or inadequate housing, but these individuals are a minority within the overall poverty population. Poverty remains an issue of serious social concern, but accurate information about that problem is essential in crafting wise public policy. Exaggeration and misinformation about poverty obscure the nature, extent, and causes of real material deprivation, thereby hampering the development of well-targeted, effective programs to reduce the problem."
I wonder if China will get around to loaning us another trillion and a half. I wonder how we'd ever pay it back. The sad fact is, fellow Americans, altogether we don't work hard enough, we don't pay enough to cover our benefits, and we seem to think the world owes us a living. The world, I'm finding out, has a different idea.
Monday, September 24, 2012
Sunday, September 23, 2012
Friday, September 21, 2012
Stein presents the most "Roman Catholic" position I've seen yet, not that I find everything has has to say persuasive. His doubts about supply-side economics interest me, but when he says that we had very high marginal tax rates in the 50s and 60s, and enormous prosperity, he neglects to mention that we were the only major industrial power left standing after WWII. The causes of our prosperity had very little to do with high tax rates, and the effective rate of federal income taxation--given loopholes--is not that different than in the fifties and sixties. Although "subsidiarity" as a principle doesn't come up in Stein's interview--and I think it needs to--he puts his finger on the flaws in both Republican and Democratic social thought when it comes to "solidarity": not enough concern for the poor by either party, nowhere near enough concern for the unborn by the Democrats.
The Funny for today from Russ Wood:
Appendix on Supply-Side Economics and Ronald Reagan:
Tax increases (11) during the Reagan Years:
Reagan Tax Increases / Bloomberg Business Week
Reagen Tax Increases / CNN
CBS Reagan and Tax Increases
Mitt Romney and Mother Jones
there has been plenty of reaction. First, conservatives and Republicans are clearly worried about this, and Romney, according to the NBC / WSJ poll, is slipping behind in the swing states that he must carry to win re-election. One of the most telling conservative reactions was on The O'Reilly Factor, by Charles Krauthammer, who, as usual, goes straight to the nitty gritty. See this link:
Krauthammer on the Damage of the Mother Jones Video
In The Weekly Standard, William Kristol had this to say:
It's worth recalling that a good chunk of the 47 percent who don't pay income taxes are Romney supporters—especially of course seniors (who might well "believe they are entitled to heath care," a position Romney agrees with), as well as many lower-income Americans (including men and women serving in the military) who think conservative policies are better for the country even if they're not getting a tax cut under the Romney plan. So Romney seems to have contempt not just for the Democrats who oppose him, but for tens of millions who intend to vote for him.
Two days ago the Wall Street Journal published the following editorial in which they construct a fictional speech for Romney, saying what they wish he would have said:
What Romney Might Have Said
Kim Strassel, a fine commentator, on the following video offers more advice to Romney ("a tall order," she says). Click on the video tab at the top of the editorial:
Making Lemonade from Lemons
Romney, of course, has had his own response. Romney's attempt to qualify what he said in the fundraiser:
Tuesday, September 18, 2012
As Charles Krauthammer said with regard to President Obama's "You didn't build that clip," a political gaffe occurs when a politician actually says what he thinks. I like "gaffes" for that reason. They are at least refreshing moments of candor. The video clip that is said to have the Romney campaign "reeling" contains a lot of truth. The 47% / 47% split that Romney talks about is right on the money. The election will be decided by about 6% of the people. And yes, people who get the most assistance from the federal government are the ones most likely to vote Democratic. Is this a big surprise? The problem is that Romney implies that half of Americans are unproductive by choice, "entitled" to live on the dole. There may be a significant percentage of people that is true about, and it may be getting higher, but I doubt if it is true of 47% of the people, and if it is, there is nothing anyone can do to save this country.
The main truth is that most people's expectations of what the government ought to provide are way out of proportion to our willingness or ability to pay for them. The desire to get some free lunch--if only through out of proportion Social Security and Medicare benefits--extends throughout the population, and any solution requires a general lowering of expectations. No politician is talking about that in a straightforward way (although Paul Ryan comes close) because it would spell electoral death. They'll all be talking about it after the election, whether they are Democrats or Republicans.
At the beginning of Obama's first term, when the first stimulus package was being put together and debated, Rahm Emmanuel expressed this attitude toward Republican dissenters: "We've got the votes. Fuck 'em." That explains as much about the political failure to address the debt and recession as any comment of the last 4 years.
The 47 / 47 split is real, but when the campaign is over, and somebody has to govern this country, compromises will have to be made. The Democrats in 2008 thought they had such a huge mandate that they could dictate an agenda, and they tried. It seemed to work for two years, as they progressively alienated moderate Republicans. All the Republicans dug in, in response. Then came the mid-term elections and gridlock. As a result, our debt problem got worse and worse. Obama seems to hate business and the phrase "fat cat" has become a staple for him. Now this from Romney. What we need is a leader with the confidence in America of Ronald Reagan and the political skills of Bill Clinton. We need senators like Daniel Patrick Moynihan and Congressmen like Gerald Ford.
Where are these people?
Monday, September 17, 2012
The above editorial by George P. Schultz and other Hoover Institution fellows appeared in today's Wall Street Journal. It paints a dire picture indeed, both of our debt trajectory: nearly to $20 trillion within ten years. I'll be surprised if it doesn't go higher. A small increase in interest rates will make management of the debt virtually impossible.
Putting this column together with Bob Woodward's new book, The Price of Politics, which shows a White House that is unable to craft political solutions to the crisis, and our future looks bleak indeed.
Sunday, September 16, 2012
Wednesday, September 12, 2012
Krauthammer nails it.
Of course people get help from the government. Of course the infrastructure that the government largely manages makes business possible. But it is just as accurate to say that businesses large and small provide a living--and all the taxes--that make government possible. It's a complex world. We need government, obviously. I don't want to fly without the FAA or eat a steak without the FDA. And obviously, we need a thriving private sector. It's absurd to put all the emphasis in one place, and when political campaigns do that, they are just setting up straw men and they know it.
So why do the Democrats worry me? Starting in 2008, we left Democratic politics as usual. Obama does not just stand for an extra measure of the Democratic welfare state, but for a philosophy that turns government into an idol, the god in charge of human happiness. The Democrats really do think that we belong to the government, instead of the government to us, and especially, that it is government which gives our lives meaning. The government is the key to our happiness. It provides hope and change--a virtual religious transformation. This is not the Democratic party of my youth that was mainly concerned with strong national defense and giving labor an even break. It is not a party that thinks government has an important role to play in national well-being. Instead, it is a party that thinks it has the fundamental role to play in enabling us to be happy.
The essence of progressivism is that there is no aspect of human life that cannot be addressed and improved by the right government policy. Life will get better and better as our policies get better and better and we asymptotically approach perfection.
If you do not think this is true, all I can say is, watch the convention speeches. That's how I read them, you may read them differently.
I have come to believe that this election is not just about bigger government versus individualism. It is about the place we give government in our lives at the metaphysical level. Can government really do, whatever its policies, what progressives think it can do? (And the label "progressive" means progression forever--no end to it.) I don't think so, and I suspect it corrupts community at the local level by assuming a national answer.
Since meaning in any individual's life comes out of our relationship with others, this election is also about national government versus local civil society. As de Tocqueville pointed out early on, much of America's strength derived from it's culture of thriving civic groups and organizations. My father's life was taken up with membership in the Lutheran Church, the Lion's club, a bowling league, and membership in the Verona Hills Country Club, which we just called "the golf course." People derived meaning in their lives from participation in many different groups, which in one way or another led back to civic involvement and service to the community. The main thing that any person builds is not a business--it's a life. I don't think that any government ought to see itself as in charge of that. Barack Obama and the Democratic party believe the United States government to be the fundamental factor of happiness in people's lives. This is really what is behind the "you didn't build that" comment, and it is scary.
But the implicit Democratic claim that government is the most important factor in enabling happiness is only half the problem. The other half is how the Democratic party views human flourishing, and it's calculus here is thoroughly materialistic. I only heard two real promises at the Democratic convention: one was that everyone would be taken care of in a more centrally managed economy; the other was that women of any age would be allowed to abort their children at any stage, and I was astonished at how much convention time was militantly devoted to "women's health issues." Happiness, according to that convention, is material comfort and being able to treat the unborn as material: cradle to grave security, sexual license, and pride in the government which provides it.
But it won't make people happy. Like Dostoevsky's Underground Man, they'll still want to throws rocks at the glass cathedral when they find out how dead it is.
The Republicans, if nothing else, are willing to allow a space for traditional civic society to exist, in its variety. Happiness flows from membership in a polis, not a colossus. I don't think that either party appreciates this enough, but under the Republicans, who at least claim to understand the limitations of big government, local civic society has done better.
Sunday, September 9, 2012
The first time I remember hearing about the Laffer Curve was in Ferris Buehler's Day Off. Here we have a scene in which future voters learn about about economic issues:
Ben Stein and Wayne Rogers Debate O'Reilly on Taxing the Rich
Saturday, September 8, 2012
But we are not turning the corner and there are no good signs, not according to Friday's job report from the Labor Department, whose statistics are nails in the coffin for Democrats.
The main facts are as follows for August: unemployment went from 8.3% to 8.1%. But everyone agrees that does not demonstrate a recovery of jobs but a loss of jobs, because people who give up looking for work are not counted in calculating the unemployment rate. The rate fell because 368,000 Americans dropped out of the work force. Moreover, hourly pay fell. In 2009 President Obama pushed his $830 million stimulus with the prediction that it would reduce unemployment to 5.6% by providing 5 million more jobs than we have now.
Economists say the Fed will now come to the rescue. Are they kidding? What has the Fed got left? Negative interest rates? A new bond-buying program. Well, it bucked up the stock market.
Before going to editorials or news digests, go to the Labor Department's "Economic News Release: Employment Situation Summer of September 7, 2012, for the raw data: August Employment Summary by BLS
Here is reaction:
Morton Zuckerman Editorial:
Jobless Numbers Worse Than They Look
Wall Street Journal Report:
Jobs Data Weigh on Fed, Obama
Friday, September 7, 2012
The Huron County Extract with great humility presents the first Presidential Election Cornpone Award to Joe Biden.
The Cornpone Award is given to the politician who most exemplifies the rhetorical standards of the greatest fighting military strategist the Confederacy ever knew, Jubiliation T. Cornpone. The awardee must demonstrate the highest standards of political oratory, including dramatic pauses that go just a little too long, the capacity to tear-up at appropriate points in the speech, and no notion of when enough is enough.
It was hard for the judges at Huron County Extract to choose between Bill Clinton and Joe Biden. Clinton 's use of the crooked finger almost put him over the top in the voting, as did the excessive length of his speech. But other judges pointed out that Clinton used the crooked finger repeatedly in claiming he hadn't had sex with Monica Lewinsky, and so, as a rhetorical gesture, it was becoming threadbare. In addition, to get the Cornpone Award, a speech has to have an old-timey quality reminiscent of ward heeling and Tammany Hall. Clinton's speech was too wonkish to meet that standard, as it actually came close to addressing policy issues. The Extract is proud to give this year's award to Joe Biden.
Republicans were just not in the running for this one.
See the Washington Post fact check article at this link: Fact Checking Obama's and Biden's Speeches
Kessler fails to pick up on the biggest distortion in Obama's or Biden's speeches, which is the implication that a tax on the rich can solve the problem of a $16 trillion debt. Neither party is confronting the logic so persuasively laid out by the Bowles-Simpson task force that taxes must go up and spending down.
Now, turning Kessler loose on Romney, he picks up on some whoppers, like the idea that the price of gasoline doubled under Obama--even my failing memory goes back to $3.5 per gallon gas four years ago--or that he raised taxes on the middle class, which Obama hasn't done and claims he will not do in the future. I don't see some of Romney's statements to be as misleading as Kessler, particularly when Romney claims that the economy "does not provide the jobs needed for 23 million people and for half the kids graduating from college." Kessler sees this as implying that they cannot find jobs at all. I don't see that. Romney claim is that 23 million people can't find the job they need--which are full-time jobs.
Romney has a plan to create 12 million jobs. Great. Who can dispute it if he says so. I have a plan to make $12 million dollars in the next year. If Mitt tells me his plan. I'll tell him mine. (Try this on your spouse tonight, and see if you get a round of convention magnitude applause. I'll let you know how I make out with mine.)
See the Washington Post fact check on Romney's acceptance speech at this link: Fact Checking Romney's Acceptance Speech
Paul Ryan's mistake--I suspect some of his staff got into trouble over this one--suggesting Obama was somehow responsible for the closing of the GM plant in Ryan's home town, which Obama said would remain open for a hundred years. Well, it was dumb for Obama to say that, but he had nothing to do with shutting up the plant, which happened before he took office.
The Republican claim that Obama said government ought to get the credit for building businesses rather than the people who had built them is a distortion of what Obama said, but that's a subject for a blog by itself. (The Republican construction of Obama's statement reminds me of the first political campaign I paid attention to, LBJ v. Goldwater. Goldwater said, "I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue!" I still think that's a snappy line, and true. But it was used like a rope to hang Goldwater in a campaign in which LBJ promised we'd never get more deeply involved in Vietnam.
See the Washington Post fact check on Ryan's acceptance speech at this link:
Fact Checking Paul Ryan's Speech
Thursday, September 6, 2012
Wednesday, September 5, 2012
2. The bailouts of GM and Chrysler
3. The Public-Private Investment Partnership to buy toxic assets from banks.
4. Cash for Clunkers
5. The Home Buyers Credit
6. Deficits which increased, in four years, the federal debt another $5 trillion
7. Five versions of foreclosure relief
8. Energy subsidies
I think that Republicans can accurately point to a general expansion of government under Obama, the creation of an uncertain business climate, the failure of a green energy policy, and a distribution of stimulus money aimed at Democratic Congressional districts.
But despite the above criticisms, economists disagree widely on whether the recession was alleviated by the stimulus spending or whether the United States threw money down the drain and only put itself deeper in debt. Here, as a voter with little technical expertise in economics, I am at the mercy of expert opinion, which goes in all different directions. An article which shows the almost impossible complexities of the issue appeared in the Washington Post and reviewed several studies; six said the stimulus helped, three said it mainly did not:
Did the Stimulus Work? A Review of 9 studies
Many commentators, even on the left, believe the stimulus was poorly designed. Stimulus packages stimulate when people spend the money they are given, but in-debt and worried Americans saved about 30% of it, or paid off debt. The trouble with social engineering is that people often don't act the way that policy-makers and bureaucrats expect them to. (Policy makers should all have to read Notes from Underground a couple of times a year.) The solution of people like Joseph Stiglitz, Paul Krugman, and Bill Bradley (see his book, We Can All Do Better) is to pump another stimulus into the economy, about as big as the last one, which they feel was inadequate. Maybe people would spend the money this time--or maybe they wouldn't. The problem of individuals who have suddenly become financially responsible extends to corporations as well, who trust the business climate so little they are sitting on about $1.5 trillion rather than investing it and hiring people. So go the best laid plans of Keynsians and the Federal Reserve . . .
What about Cash for Clunkers and the rest? Some analysts say Clunkers generated car sales, and others that it just moved them ahead a couple of months. There is disagreement among economists on most of what Obama did.
With brilliant economists in disagreement, but divided along clear party lines, the responsible voter doesn't get much help, despite hours of reading. All the claims, by both parties, to know what they are doing are cast into deep suspicion as one gets into the basic data and what various professors make out of it--Chicago and Harvard liberals taking one stance, Stanford Hooverians another. The claims and the charges at the national conventions become absurdly over-confident when seen against the pattern of complexity and uncertainty that really exists.
Lets say that on this one Obama gets a pass, barely. His programs may have alleviated some unemployment, but whether they were worth the money that eventually will have to be paid is hard to say.
The following interview of Joseph Stiglitz is interesting as an appendix to the above. He identifies the weaknesses in the Obama stimulus, and forges into the unknown with great confidence: