economics

In the current society we live in, this piece by Glenn Harlan Reynolds is too good to excerpt. Read it.

It’s takers versus makers and these days the takers are winning

“Fifty thousand for what you didn’t plant, for what didn’t grow. That’s modern farming — reap what you don’t sow.”

That’s a line from a song about farm subsidies, “Farming The Government,” by the Nebraska Guitar Militia.

But these days it applies to more and more of the U.S. economy, as Charles Sykes points out in his new book, A Nation Of Moochers: America’s Addiction To Getting Something For Nothing.

The problem, Sykes points out, is that you can’t run an economy like that. If you tried to hold a series of potluck dinners where a majority brought nothing to the table, but felt entitled to eat their fill, it would probably work out badly. Yet that’s essentially what we’re doing.

 In today’s America, government benefits flow to large numbers of people who are encouraged to vote for politicians who’ll keep them coming. The benefits are paid for by other people who, being less numerous, can’t muster enough votes to put this to a stop.

Over time, this causes the economy to do worse, pushing more people into the moocher class and further strengthening the politicians whose position depends on robbing Peter to pay Paul. Because, as they say, if you rob Peter to pay Paul, you can be pretty sure of getting Paul’s vote.

 But the damage goes deeper. Sykes writes, “In contemporary America, we now have two parallel cultures: An anachronistic culture of independence and responsibility, and the emerging moocher culture.

“We continually draw on the reserves of that older culture, with the unspoken assumption that it will always be there to mooch from and that responsibility and hard work are simply givens. But to sustain deadbeats, others have to pay their bills on time.” 

And, after a while, people who pay their bills on time start to feel like suckers. I think we’ve reached that point now:

* People who pay their mortgages – often at considerable personal sacrifice – see others who didn’t bother get special assistance.
* People who took jobs they didn’t particularly want just to pay the bills see others who didn’t getting extended unemployment benefits.
* People who took risks to build their businesses and succeeded see others, who failed, getting bailouts. It rankles at all levels.

 And an important point of Sykes’ book is that moocher-culture isn’t limited to farmers or welfare queens. The moocher-vs-sucker divide isn’t between the rich and poor, but between those who support themselves and those nursing at the government teat.

Plenty of the wealthy are doing the latter, and that has its own consequences, which are often worse than those stemming from goodies for the poor. 

In a world of bailouts and crony capitalism – which is to say, in the world we live in today – a rational businessperson has to compare the return on investment between improving a product or service, or lobbying the government for goodies.

Frequently, the latter looks better: If you spend $1 million on lobbying, and get a $1 billion subsidy from the government, that’s a thousand-fold return on your money.

It’s hard to do one-hundredth as well through actual capitalism. So why bother to improve your products at all? Just hire more lobbyists.

Of course, the government can provide such rewards only because it has vast resources of coercive power, and vast stocks of other people’s money.

Deploying those resources for self-serving political purposes is nothing new, but – as Sykes points out in considerable detail – things are much worse now than they were during previous periods of excess. 

So what’s next? Well, as Margaret Thatcher once said, the problem with socialism is that sooner or later you run out of other people’s money. That’s a special case of Herb Stein’s observation that something that can’t go on forever, won’t. 

With federal borrowing at unsustainable levels, with the bailed-out auto companies and banks not looking particularly healthy, and with the steady drip-drip of financial scandals moving toward the point that even an Obama-friendly media will have to cover them, we appear to be approaching a crisis point.

America is not yet Greece, Spain, or Portugal, but those are the natural endpoints of a moocher-based political system.

When the crisis comes, and it will, we should relearn the lesson that the Framers of our Constitution knew and tried to embody: The bigger and more powerful the national government is, the more prone it is to corruption and interest-group domination.

A federal government that actually operated within the limits intended by the Framers would be much smaller, much less capable of creating economic distortion, and much less attractive to moochers and the politicians they enable. The bigger the pot of honey, the more flies it attracts.

Undoing what Richard Epstein calls “the mistakes of 1937,” in which most of those limits on federal power were removed by the Supreme Court, would go far toward fixing the problem.

That, of course, would require a Supreme Court with a more traditional view of the Constitution’s limits on federal power. Which would require a president interested in appointing justices with such views.

Something to keep in mind, between now and November.

This is a must-see ad from Americans for Prosperity.

Obama visits the Phoenix area today, and according to this report, thousands of workers involved in the expansion of the Intel facility the President is visiting are taking a forced, non-paid day off.

This was an interesting part of the story:

But some workers — who put in six, ten-hour days every week — disagree. Several expressed their frustration over losing out on 20 percent of their paycheck.

“[The president] is here to talk about jobs and the economy and yet he’s forcing middle-class people right out of work for a day,” said a worker who contacted KTAR. “We’re losing an overtime day. It hurts.”

Consider that, President Obama… it hurts.

Obama told some real whoppers in is State of the Union address. Here are just a few:

This country needs an all-out, all-of-the-above strategy that develops every available source of American energy – a strategy that’s cleaner, cheaper, and full of new jobs.

C’mon, do you really expect us to believe that you support an “all of the above” strategy less than a week after you strike down the Keystone pipeline?  Get serious.

On clean energy – in particular, Solyndra, he said this:

Some technologies don’t pan out; some companies fail. But I will not walk away from the promise of clean energy. I will not walk away from workers like Bryan. I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. We have subsidized oil companies for a century. That’s long enough. It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising. Pass clean energy tax credits and create these jobs.

Really?  There are already more tax credits for “clean” energy than any other form of energy.  To ask Congress to pass MORE tax credits and incentives – while billions of tax-payer dollars have been wasted, is irresponsible.

Speaking of taxes:

Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.

First off, does he really argue that the government SPENDS money on tax breaks? That is a typical Democrat talking point, as if it’s THEIR money to begin with. Secondly, Obama is purposely trying to confuse the American people by not acknowledging the difference between “earned” income and “unearned” income.  Warren Buffet doesn’t take a salary – so he doesn’t have “earned” income.  He has enough wealth that he can live on his investments and interest.  Those are called capital gains.  The capital gains tax rate is 15%, for good reason – because it is capital gains that fund new businesses, which in turn grow the economy.  If Obama actually doubles the tax rate on capital gains, economic growth will grind to a halt.  This is a cynical attempt to engage in class warfare, while trying to claim that it isn’t class warfare.

Obama continues:

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.

Notice his crafty addition of the word “earning” when he is talking about people who are millionaires?  He knows, as well as anyone, that people who are “earning” millions are paying a much higher rate than the 15% of unearned income. They don’t get special subsidies or deductions – it just may be that their deductions are higher because they give more to charity, etc.

Obama continues again:

Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

They only call that common sense when you confuse earned income with unearned income.

And here is the biggest whopper of the night:

We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference – like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right.

What’s not right, Mr. President, is for you to demagogue taxes in a way that is cynical and anti-productivity.

It’s sad that the President of the United States cannot be honest with the American people.

Everyone knows that State of the Union speeches are mostly for show.  Still, the news that Warren Buffet’s secretary is going to be Michelle Obama’s guest in the First Lady’s box takes this speech from ridiculous to absurd.

Typically, the guest of the First Lady is a hero of some sort.  Nancy Reagan was the first First Lady to have guests at the State of the Union.  Her first State of the Union guest, in 1982, was Lenny Skutnik, a Congressional Budget Office employee who had jumped into the icy waters of the Potomac River to help rescue survivors after Air Florida Flight 90 crashed into the Potomac River in 1982.

Reagan said Skutnik demonstrated “the spirit of American heroism at its finest.”  He then said, “We saw the heroism of one of our young government employees, Lenny Skutnik, who, when he saw a woman lose her grip on the helicopter line, dived into the water and dragged her to safety.”

Other guests have included: Alma Powell and Brenda Schwarzkopf, the wives of Gens. Colin Powell and Norman Schwarzkopf, who were leading military operations in Iraq; Richard Dean, a Social Security Administration employee, who helped rescue victims of the Oklahoma City bombing; flight attendants Christina Jones and Hermis Moutardier who helped thwart an attempted bombing by Richard Reid, the so-called “Shoe Bomber.”

The other guest tonight with Michelle Obama is Mark Kelly, husband of Gabby Giffords.  It is pathetic that someone who has demonstrated incredible courage and persistence in helping with the recovery of Giffords is sharing space with Warren Buffet’s secretary, who is merely a prop for more arguments for class warfare.

Warren Buffet pays a lower rate than his secretary because he does not have any “earned” income.  All of his income comes from his investments so it is passive income – or capital gains – and taxed at the 15% rate.

This is why Mitt Romney pays the same rate.  He doesn’t have earned income – it’s all investment income.

So we’ll get to see Obama demagogue wealth creators tonight, using a (well-paid) secretary as a prop.

Mitt Romney was never going to win South Carolina.  Yes, I know polling had him ahead for a short time after Iowa and New Hampshire when it looked like Newt was done (again).  South Carolina is a part of the Bible belt and a Mormon is not going to do well in a Republican primary when there are other options.

Newt, as flawed as he is, benefited from conservative backlash at the media for the release of Marianne Gingrich’s interview just days before the South Carolina vote.  We saw the same kind of bounce of support for Herman Cain in the initial coverage of his alleged harassment issues.  Conservatives know there is a media bias, and if you are being personally attacked in the media, then you must be ok.

All this to say that as remote a possibility as even I thought it was to have three different winners after the first three contests, that’s exactly where we are.

Florida is Romney’s to lose.  It’s a big, expensive state, which has had absentee ballots out for almost three weeks and Romney has been the only candidate with a broad presence there.  It could be his firewall.

However, if Newt’s momentum coming out of South Carolina translates to a Florida victory, then it’s probably going to take until Super Tuesday (March 6) to settle this thing.  Of course, it could take until April 3, when Texas holds it’s primary, or even until April 24^th when New York and Pennsylvania hold theirs.  I don’t think it’s going to go all the way until California’s primary in early June. The longer it goes, the more likely that Newt implodes.

Following Florida, Romney probably does better than Newt in the Nevada and Colorado caucuses and the Arizona and Michigan primaries.  Even if Newt hangs in there, Super Tuesday will be tough, because he isn’t even on the ballot in one of the larger states that day (Virginia).

Here’s how I see Super Tuesday breaking down, if Newt is still actively campaigning:

Newt probably wins Alaska, Georgia, Oklahoma and Tennessee – that’s 204 delegates.

Romney takes Idaho, Massachusetts, North Dakota, Ohio, Vermont, Virginia and Wyoming – that’s 262 delegates.

While Romney may want to see this thing buttoned down and done in the next couple weeks, he is by no means in trouble if he loses Florida.  His true firewall is April 24, where he will sweep New York, Pennsylvania, Connecticut, Delaware and Rhode Island.

No need to panic, just keep that steady, methodical machine going and don’t stray from the message of free enterprise and economic freedom.  It worked for Reagan.

I am officially on the Mitt Romney for President bandwagon. For the first time since Ronald Reagan, we have a candidate who is explicitly campaigning on the principles of free enterprise and economic freedom, something that has been sorely missing from Republican leadership since Reagan left the White House.

At the end of the day, our nation’s greatness is made possible by the freedoms that we are guaranteed by our Declaration of Independence, Constitution and Bill of Rights. For someone like Newt Gingrich to criticize Mitt Romney for engaging in free enterprise is not only weak, but morally bankrupt; he should be ashamed.

For the sake of our great nation, I hope and pray that Gingrich flames out soon – if he is our nominee, when it comes to the fundamentals of our foundational freedoms, how is he different than Barack Obama?

One thing for sure, this isn’t over by a long shot.

This is a must-see of watching someone trying to defend the indefensible.  The Democratic National Committee Chairwoman is Congresswoman Debbie Wasserman-Schultz.  She is smart and articulate, but when trying to defend President Obama regarding his Solyndra disaster, she doesn’t look smart and she isn’t articulate.

This is an issue that will haunt President Obama and his surrogates for months to come.

Check it out here.

Romney’s win in New Hampshire was solid, and given that Gingrich and Santorum are battling for fourth place at about 10% each, I tend to agree with commentator Jeff Greenfield’s tweet from earlier tonight which said, “This is not Mitt’s victory speech–it is his acceptance speech.”

The nomination is essentially done.  For the first time in history, a non-incumbent candidate for the Republican nomination has won both Iowa and New Hampshire.

It’s time for this to be over, and for the other candidates to pack it up.  The shameful attacks by Newt Gingrich, essentially engaging in class warfare against Romney, will only hurt the cause of free enterprise, and Newt should know better.

I know that Ron Paul will stay in, and that’s fine; he’s a non-factor.

OK Republicans, get united and go beat Obama.

On May 26, 2010, Obama famously said, “The true engine of economic growth will always be companies like Solyndra.”

Less than six months later, Obama administration officials were telling Solyndra executives that they didn’t want them to announce layoffs until November 3^rd… conveniently one day after the 2010 mid-term elections.

What’s worse, Obama administration officials recognized that Solyndra was on a path to failure nearly nine months BEFORE Obama’s May speech at Solyndra saying it would be the “engine of economic growth.”

To wit:

“We still have a major outstanding issue…the project cash balance goes to $62,000.00 in September 2011” (Email between Department of Energy staff, 8/19/09)

“(H)ow can we advance a project that hasn’t funded working capital requirements…” (Email between Department of Energy staff, 8/20/09)

Now we learn that former Republican Massachusetts Governor (and Obama endorser) William Weld was hired to defend Solyndra in the Congressional hearings, held to investigate one of the most obvious examples of cronyism in the Obama Administration.

It just goes to show that corruption can be bipartisan.