Who Pays?

From Clusterstock:

Here's why government spending is really out of control.

First of all, half of Americans don't even pay income taxes, but it gets worse. If we look at total federal taxes, 20% of Americans pay 70% of taxes, as shown above. 40% of Americans pay 95% of federal taxes.

Yet when it comes to deciding how these tax dollars are distributed, those that pay 95% of the taxes are outnumbered by the 60% who pay just 5%. Thus, when it comes to the politics of government spending, most Americans are arguing about how to use other people's money. No wonder nobody wants to see real spending cuts.

(According to the 2006 data from the Congressional Budget Office's latest tax burden release.)

Boomism

This entire article from Dana Rubinstein in the New York Observer is worth reading, but I wanted to stress the quotes from Jimmy Kuhn, president of the brokerage firm Newmark Knight Frank:

“There already seems to be a lot of capital out there that thinks that just because it cost $1,000 a foot a few years ago that $500 a foot is cheap,” said Mr. Kuhn, referring to office building prices, which, during the heady boom years, routinely exceeded $1,000 a square foot, even, and most egregiously, for a comparatively modest office building in Soho. “There are a lot of people starting again to underwrite office buildings with aggressive projections for growth in rents.”

“The worst invention in real estate history was the project and Argus models that encourage investors to compound growth rates so that the ultimate projected sale makes up the majority of the value. This lesson will never be learned. The great investors like Buffet and others don’t need inflation to bail them out. It’s why large oil companies will buy smaller companies with assets in the ground rather than waiting for oil to reach 150 dollars a barrel. So as in real estate the big money will be in the acquisitions that take advantage of weak borrowers, over leverage, or structural problems rather than buying based on 100 rent expectations that may or may not reach most buildings.”

War on Unpaid Interns

This letter to the Wall Street Journal from economist Don Boudreaux is pretty classic:

Here’s a letter sent to the Wall Street Journal:

So the Obama administration is rescuing exploited American youth from working as unpaid interns at for-profit companies (“War on Interns,” April 7).

It’s unclear, however, why the same young people whom the President judges to be unfit to choose for themselves whether or not to work as unpaid interns at for-profit firms are fit to choose for themselves whether or not to work as unpaid interns at not-for-profit organizations. So I urge this administration, which is ever-vigilant at protecting us from our irrational and helpless selves, also to prohibit young people from working as unpaid interns at not-for-profit outfits – such as political campaigns.

Indeed, Mr. Obama should not only apologize to the thousands of young, unpaid volunteers whom he exploited in 2008 for his own profit – namely, to win his election to the highest pulpit in the land – he should also give to each and every one of them back pay (with interest) for their efforts on his behalf.

Our Father-in-Chief surely doesn’t want history to remember him as a cruel exploiter.

Sincerely,

Donald J. Boudreaux

New World Order

A very interesting piece from Britain's Daily Mail:

.....I've just been in touch with Dr James Lucier, a former US Senate Foreign Relations Committee Staff Director, about all this. He tells me: 'Culturally, Obama detests Great Britain. He sent the bust of Churchill back without a fig leaf of an excuse. He insulted the Queen and the Prime Minister, giving them ridiculous gifts.' At one point, 'he refused to meet the prime minister.'

Here is what is happening, though the British Government seems oblivious of it. The Obama administration is ready to dump the Old World in pursuit of the One World.

Britain is being dumped. The special relationship, whatever is left of it, is over. Britain losing control of the Falklands to Argentina would just be collateral damage.

But France is being dumped, too. Obama's ostentatious refusal to have dinner with President Sarkozy during his visit to France last year was no accident. Rather than meet the French president, Obama went off to a restaurant with his wife Michelle.

Germany is being dumped. Obama has been little more than dismissive of Chancellor Merkel. Russia in turn will be waved aside.

Most spectacularly of all, the European Union has now been comprehensively dumped. The American president has refused to attend what is supposed to be a US-EU Madrid summit in May.

What we have shaping up, but what the British Government doesn't yet grasp, is that Obama has a conscious policy of down-grading America's relationship with, first, Britain and then with the rest of Europe.

He believes that the US -- yes, his own country -- and Britain, and the leading European countries, too, for that matter, are imperial powers who ruthlessly exploited the Third World for their own profit.

And Obama is America's first Third World president.

Forget Obama's Chicago black cadence. It is a fake. He copied from the kind of black preachers that were unknown to him until he was a grown man and inventing his political image.

What the Obama administration has near-wiped from the president's personal history is that his only childhood links with America were as a schoolboy in a fashionable private school in Asia-dominated Hawaii, where he was raised by his white, bank executive grandmother.

Chicago is not Obama's homeland. It never was his formative influence. The president's world view is more aligned with that of Indonesia.

You can be sure the gift Obama gives the President of Indonesia will be something more than the dvd box-set of old Hollywood movies he gave to Gordon Brown. The US president's manner on the trip to Indonesia will be more the manner he showed to the King of Saudi Arabia last year. The king received a deep bow, something never done by any US president before. Obama also kow-towed to the Emperor of Japan and to the Chinese premier.

What's going on? According to Dr Lucier, Obama's policy is to disestablish the United States, Great Britain and Europe from the hegemony of world power, and elevate in their place the hegemony of the Third World under international governance.

Remember, Obama is a deracinated individual. He has no roots. He is a man from an Asian-Pacific background bred to no admiration for the ancient constitutional history which, until now, has reached across the Atlantic to bind America and Britain.

The president actually feels that the US Constitution, which grew out of Magna Carta and the 1689 Bill of Rights, is 'inadequate.'

Indeed, Obama has stated that, because the US Constitution guarantees only 'negative rights' -- that is, establishes what the US Government may not do to individuals or to the sovereign states -- instead of giving people guarantees of food, shelter education and health care and the rest, it is 'inadequate.'

That is one reason he has worked so hard to get the health care legislation through Congress. It is undoubtedly unconstitutional. Already, the attorneys-general of Florida and South Carolina are poised to challenge its constitutionality in court. At least another dozen state attorneys-general may join in the suit.

Obama has made it clear he despises both the US Constitution and the British tradition from which it springs.

..........His vision is for the US to abandon its Constitution and its laws, which are tied to Britain, the country for which he has shown such disdain.

An Easter Prayer from Dr. Johnson

Almighty and everlasting God, who hast preserved me by thy fatherly care through all the years of my past Life, and now permittest me again to commemorate the sufferings and the merits of our Lord and Saviour Jesus Christ grant me so to partake of this holy Rite, that the disquiet of my mind may be appeased, that my Faith may be encreased, my hope strengthened, and my Life regulated by thy Will. Make me truly thankful for that portion of health which thy mercy has restored, and enable me to use the remains of Life to thy glory and my own salvation. Take not from me O Lord thy Holy Spirit. Extinguish in my mind all sinful and inordinate desires. Let me resolve to do that which is right, and let me by thy help keep my resolutions. Let me, if it be best for me, at last know peace and comfort, but whatever state of life Thou shalt appoint me let me end it by a happy death, and enjoy eternal happiness in thy presence, for the sake of Jesus Christ our Lord. Amen.

Paul Ryan's Speech on Progressivism

Here is a link to the entire speech, but here are the points I believe all Americans should read:

Last week, on March 21st, Congress enacted a new Intolerable Act. Congress passed the Health Care bill – or I should say, one political party passed it – over a swelling revolt by the American people. The reform is an atrocity. It mandates that every American must buy health insurance, under IRS scrutiny. It sets up an army of federal bureaucrats who ultimately decide for you how you should receive Health Care, what kind, and how much…or whether you don’t qualify at all. Never has our government claimed the power to decide when each of us has lived well enough or long enough to be refused life-saving medical assistance.

........We are at the beginning of an election campaign like you’ve never seen before!

We are challenged to answer again the momentous questions our Founders raised when they launched mankind’s noblest experiment in human freedom. They made a fundamental choice and changed history for the better. Now it’s our high calling to make that choice: between managed scarcity, or solid growth … between living in dependency on government handouts, or taking responsibility for our lives … between confiscating the earnings of some and spreading them around, or securing everyone’s right to the rewards of their work … between bureaucratic central government, or self-government … between the European social welfare state or the American idea of free market democracy.

.......True, the United States has been moving slowly toward this path a long time. And Democrats and Republicans share the blame. Now we are approaching a “tipping point.” Once we pass it, we will become a different people. Before the “tipping point,” Americans remain independent and take responsibility for their own well-being. Once we have gone beyond the “tipping point,” that self-sufficient outlook will be gradually transformed into a soft despotism a lot like Europe’s social welfare states. Soft despotism isn’t cruel or mean, it’s kindly and sympathetic. It doesn’t help anyone take charge of life, but it does keep everyone in a happy state of childhood. A growing centralized bureaucracy will provide for everyone’s needs, care for everyone’s heath, direct everyone’s career, arrange everyone’s important private affairs, and work for everyone’s pleasure.

.......Am I exaggerating? Are we really reaching this “tipping point”? Exact and precise measures cannot be made, but an eye-opening study by the Tax Foundation, a reliable and non-partisan research group, tells us that in 2004, 20 percent of US households were getting about 75 percent of their income from the federal government. In other words, one out of five families in America is already government dependent. Another 20 percent were receiving almost 40 percent of their income from federal programs, so another one in five has become government reliant for their livelihood.

All told, 60 percent – three out of five households in America – were receiving more government benefits and services (in dollar value) than they were paying back in taxes. The Tax Foundation estimates that President Obama’s budget last year will raise this “net government inflow” from 60 to 70 percent. Look at it this way: three out of ten American families are supporting themselves plus – through government – supplying or supplementing the incomes of seven other households. As a permanent arrangement, this is individually unfair, politically inequitable, and economically dangerous.

.......Last January President Obama said: “There are simply philosophical differences that will always cause us to part ways. These disagreements, about the role of government in our lives, about our national priorities and our national security, have been taking place for over two hundred years.”

He was right. So let’s examine these “philosophical differences” of government. Progressivists say there are no enduring ideas of right or wrong. Everything is “relative” to history, so our ideas need to change. Progressivists say the Founders’ Constitution including its amendments, with its principles of equal natural rights, limited government, and popular consent is outdated. We should have a “living constitution” that keeps up with the times. Progressivists invent new rights and enforce them with a more powerful central government and more federal agencies to direct society through the changes of history. And don’t worry, they say. Bureaucrats can be controlled by Congressional oversight.

........Would you like an example of how successful Congressional oversight is? Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises (or GSEs), underwrote trillions of dollars in junk mortgages. Year after year their officials and others from HUD, Treasury, and other agencies who supervise them marched up to Congress for hearings. Red flags were raised. The oversight committees had other priorities and dismissed them out of hand. With the housing market already tanking, Financial Services Committee Chairman Barney Frank said: “This ability to provide stability to the market is what, in my mind, makes the GSEs a congressional success story.” Less than 18 months later, the ‘market-stabilizing’ GSEs went belly-up due to their shoddy business practices, collapsing the mortgage credit industry and sparking the worldwide financial meltdown. No one knows the ultimate cost to the taxpayers but it will be gigantic.

If Congress can’t control what a few mortgage finance bureaucrats do with your dollars, why would anyone trust Congress to control what tens of thousands of bureaucrats will do with your health?

........A political realignment is on the way. Democratic leaders are staking their party’s future on their ideological agenda. Financial Services Committee Chairman Frank candidly admits that his party “are trying on every front to increase the role of government.” Former President Clinton told a Netroots convention last year that “We have entered a new era of progressive politics, which if we do it right could last 30 or 40 years.”

The question is, do we realign with the vision of a European-style social welfare state, or do we realign with the American idea?

Jerk or Mensch

From Dr. Goulston:

Ten Ways to Recognize a Jerk:

1. They interrupt.

2. They don’t take turns.

3. They take advantage of people who are down.

4. They gloat in victory.

5. They are sullen in defeat.

6. They are not fair.

7. They lack integrity.

8. They are the people you hope you won’t grow up to be like.

9. They are the kind of person you wouldn’t want your sister (or brother or child) to marry.

10. They are the kind of person you’ll avoid, if you can break free of them.

Ten Ways to Recognize a Mensch:

1. They don’t interrupt.

2. They take turns.

3. They don’t take advantage of people who are down.

4. They are gracious in victory.

5. They are noble in defeat.

6. They are consummately fair.

7. They have integrity.

8. They are the people we want to grow up to be like.

9. They are the kind of person we would want our sister to marry.

10. They are kind of person you’ll cherish, if you’re lucky enough to have
one in your life.

Burt Fulsom on Divisiveness

I thought this post from Burt Fulsom was worth quoting in full:

Many observers are labeling Barack Obama as a divisive president. Those critics should not be too smug, however. The single most divisive president in U. S. history was Abraham Lincoln, and historians often rate him the best, or the second best, president in the nation’s history. So divisiveness alone is not a defect as long as the cause is one that supports natural rights and rallies most of the nation. The ultimate ending of slavery is a good item on any leader’s checklist of accomplishments.

What’s different about President Obama’s divisiveness is that it was inevitable from the beginning of his presidency and it will, unless he changes course, endure until he is out of office. The message of redistribution of wealth is at the core of his belief system, and his efforts take from some groups to give to other groups, which will always cause division. The same was true of FDR, who also sparked sharp divisions in the 1930s. President Roosevelt gave subsidies to farmers, silver miners, and citizens of the Tennessee Valley, among others. At election time, the president came around to collect their votes and their campaign contributions. The Republicans for a long time didn’t know what hit them. Neither did successful entrepreneurs, who found themselves in the 90 percent tax bracket by FDR’s third term. FDR’s political game–one emulated by Mr. Obama–was to identify struggling interest groups, shower them with federal dollars, and hand the tax bill to “economic royalists,” who had more than enough to live on.

Such redistribution makes political sense, but it ruins the economy. FDR had 20.7 percent unemployment toward the end of his second term in part because wealthy Americans refused to use their remaining capital for investment. Why start a business when your profits will be confiscated if you succeed? No business means no employment and that means a lot of people looking for work–a problem afflicting both FDR and Mr. Obama.

President Reagan did have critics, but his strategy was very different from FDR’s. Reagan wanted to cut tax rates, turn entrepreneurs loose, and see what new industries would emerge to hire a new generation of Americans. During his presidency, the U. S. economy grew by more than 25 percent, and we had many new products–fax machines, cell phones, VCRs, computers. A host of relatively new inventions became household items in the 1980s and 1990s. Do you remember the first time you used a computer, or a VCR? In the course of creating all of this prosperity, many new millionaires–and even billionaires–were created. To President Reagan, this was well and good; many of these entrepreneurs were role models for what can be accomplished in a free society. But to President Obama, that success seems to have been a signal that redistribution needed to take place. And thus, after massive economic growth from 1982 to 2007, we have the current move for redistribution of wealth and the inevitable dividing of America.

Health Care and Underpants Gnomes

Steven Horowitz latest editorial is a must read:

Congress recently passed a bill that will substantially increase the government’s discretion over health care. How can we better understand it? The cartoons South Park and The Care Bears can teach us an important lesson about economics and politics. And in so doing, they also caution us about why we need to take such topics more seriously than cartoons do.

In a classic episode of South Park the boys have to write a paper about corporations. They end up encountering a group of underpants gnomes who have a detailed business plan:

1. Collect Underpants

2. ?

3. Profit

.......Effective economic and political institutions are ones that provide both the incentives for people to pursue their own good by serving others and the knowledge of which actions will do so. In the world of the underpants gnomes, and the world of health care reform, such questions are not asked. Results are expected to magically appear from good intentions.

In short, a lot of people focus their energy and attention on the goal of “health care for everybody” without really thinking hard about the steps between passage of the bill and what they want to happen. Applied economics, according to Sowell, is the art of “thinking past stage one,” and our refusal to do that will cost us trillions of dollars. The previous administration failed to think past Stage One when it started writing checks for wars of questionable merit and for bailouts of financial firms. The current administration has continued the trend with health care reform.

The Care Bears are kind of like the underpants gnomes in that they too think good intentions are enough. They fight evil with what is called “The Care Bear Stare.” Wikipedia explains:

The Care Bears’ ultimate weapon is the “Care Bear Stare,” in which the collected Bears stand together and radiate light from their respective tummy symbols. These combine to form a ray of love and good cheer which could bring care and joy into the target’s heart.

This describes the shallowness of a lot of public-policy debates. Rather than focusing on the processes by which social decisions are made, people debate the merits of proposed legislation based on their intended outcomes, and this frames opposition to well-meaning legislation as follows: People who want the legislation are kind and good; people who don’t want it are either evil or corrupt or they just don’t want to share. One need only examine the rhetoric coming from the pro-ObamaCare side in the final congressional debates to see this in action.

.........Judging legislation by its intentions and not engaging in real social scientific analysis is the equivalent of using the Care Bear Stare. And when trillions of dollars, most of it coming from the future wealth of our children, is on the line, it is the height of irresponsibility.

We predict that future economics textbooks will look back on the disaster that emerges from the so-called “health care reform” as a classic example of the law of unintended consequences and, we hope, of the difference between decision-making in politics and decision-making in markets. We should not be surprised to find out that when we approach serious social issues with the mindset of cartoon characters that our economy quickly begins to resemble a cartoon. In this case, we fear we that in spending trillions on intentions, we have become like Wile E. Coyote running off the cliff and hanging in midair until he realizes the situation he’s created for himself, at which point he comes crashing down.

Lincoln Quote

"You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot lift the wage earner up by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away people's initiative and independence. You cannot help people permanently by doing for them what they could and should do for themselves."

--Abraham Lincoln