Friday, October 19, 2012

A Virtuous Cycle

Give credit where credit is due. The left is adept at concocting political ads so outrageously off the mark and so lacking in subtlety as to make them genuinely entertaining. The hilarious production of Paul Ryan Throws Granny Off A Cliff (link) is a classic example. Much like Ed Wood movies, these ads are so bad, they’re good.

Among the most misleading and funniest ads are those that show a bunch of paunchy, late middle aged, pinstriped suited, white (always white), men (always men) beating up, stealing from or otherwise manhandling small, helpless, innocent children. One current version running locally has a group of these well-dressed bullies infiltrating a football game being played by a bunch of youngsters. They steal the ball, take over the game and end up performing celebratory dances much to the puzzlement and consternation of the pitiable tots. The voice over message is that so–and –so gave tax breaks to rich, fat cat CEOs and paid for it by cutting school funding. One is left wondering how this unspeakably crass and mean-spirited a--hole ever got elected to public office in the first place.

What actually happened in this case is that so–and –so supported a business tax cut to encourage investment and job growth in a state (Michigan) which had been disproportionately hurt by the recession and eight years of Governor Jennifer Granholm. (As the ad would have it, all business tax cuts go directly and exclusively to the CEO). Separately, so–and –so voted to reduce and re-direct education funding away from the teachers’ unsustainably large retirement budget and toward local schools. Thus the “children” - a leftist euphemism for “teacher’s unions” - actually benefitted. It was the teachers that had to make do with less in their retirement. (And only those hired after September 2012).

The problem in Michigan as in many other states and the nation as a whole is this - as the entitlement policies of the left expand and consume more of the culture and the economy, growth and productivity slow, and there is less innovation, less employment, less prosperity. As people become poorer, advocates for "social justice" demand more government assistance - longer terms of unemployment insurance, greater reliance on food stamps, calls for subsidies for housing, education, energy and the like. This strains government's budgets, especially with the reduced revenues resulting from low economic growth. The left's prescription is higher taxes, especially on the "rich". Higher tax rates on job creators further impedes economic growth and fortifies and perpetuates this vicious cycle of entitlements and dependence. This scenario is currently being played out, and we are worse off for it.

The alternative is a virtuous cycle - Stop punishing success. Lower the barriers to investment and innovation by implementing a simpler tax code, lower tax rates and a sensible regulatory environment. (An example of a non-sensical regulation - declaring carbon dioxide a pollutant). This will spur economic growth, improving living standards for everyone while raising government revenues. These revenues can then be utilized for legitimate government functions like defense (priority one of course), basic scientific research, infrastructure spending, and assisting the truly needy (who will be vastly reduced in number). Local governments, should they choose, could then apply a fiscally responsible portion of income to subsidizing benefits for its workers. Even teacher's unions will be pleased with the result.

We've been spoiled, ironically, by that which the left so despises, free market capitalism. A common belief seems to be that wealth somehow falls out of the sky and into the laps of greedy industrialists reluctant to distibute even miserly portions. "Share the wealth", Obama commands. This is dangerous nonsense. Share the wealth? The wealth is gone. The nation is $16 trillion in debt. That's $16 with 12 zeros after it, heading to $20 trillion and beyond. Want to fix it by taxing the rich? Hey, I'll go one better. Let's confiscate all of their assets. Take away everything - all the money, stocks, bonds, commodities, real estate, art, baseball cards, everything, from every "millionaire" and "billionaire" in the country. The resulting sum would just about cover one year of Obama's deficits - never mind the debt. (And plunge us into a deep depression). Share the wealth? No. Create the wealth. And nothing does it better than capitalism. That there exists in the world any degree of prosperity can be credited to the development of this remarkable system.

Economist Walter Williams divulges one the great secrets of our time.

There's nothing intellectually challenging or unusual about poverty. For most of mankind's existence, his most optimistic scenario was to be able to eke out enough to subsist for another day. Poverty has been mankind's standard fare and remains so for most of mankind. What is unusual and challenging to explain is affluence -- namely, how a tiny percentage of people, mostly in the West, for only a tiny part of mankind's existence, managed to escape the fate that befell their fellow men.

As its silly ads demonstrate, the left repeatedly demonizes business people. It ridicules the strategy of removing obstacles to the free exchange of goods and services in order to improve living standards. That this is a politically effective ploy doesn’t speak well of an electorate generally ignorant of that strategy. And it doesn't speak well of its leaders. Lee Habeeb and Mike Leven (NRO) argue that even the President of the United States seems shamefully unaware of the glorious benefits of having motivated people chasing profits. (To help illustrate their point, the writers use the unlikely example of potato chips).


Because it's relevant to the subject, I'm posting the following link again.

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