Thomas Sowell - Capitalism vs. Government

Great points here from Thomas Sowell.  As relevant now as it was a decade ago.  The private sector (capitalism) is what propels the standard of living forward, not government.  The best way to continue making progress is to allow individuals and businesses to innovate with the minimum regulatory burden possible.  This also extends to taxation - leaving more $$ in the hands of those who produce enables economic expansion and shared prosperity (not to mention avoiding the moral implications of taking from one group to give to another).  I hope you'll take a read...

The Real Public Service

By Dr. Thomas Sowell

May 31, 2010

Every year about this time, big-government liberals stand up in front of college commencement crowds across the country and urge the graduates to do the noblest thing possible— become big-government liberals.

That isn't how they phrase it, of course. Commencement speakers express great reverence for "public service," as distinguished from narrow private "greed." There is usually not the slightest sign of embarrassment at this self-serving celebration of the kinds of careers they have chosen— over and above the careers of others who merely provide us with the food we eat, the homes we live in, the clothes we wear and the medical care that saves our health and our lives.

What I would like to see is someone with the guts to tell those students: Do you want to be of some use and service to your fellow human beings? Then let your fellow human beings tell you what they want— not with words, but by putting their money where their mouth is.

You want to see more people have better housing? Build it! Become a builder or developer— if you can stand the sneers and disdain of your classmates and professors who regard the very words as repulsive.

Would you like to see more things become more affordable to more people? Then figure out more efficient ways of producing things or more efficient ways of getting those things from the producers to the consumers at a lower cost.

That's what a man named Sam Walton did when he created Wal-Mart, a boon to people with modest incomes and a bane to the elite intelligentsia. In the process, Sam Walton became rich. Was that the "greed" that you have heard your classmates and professors denounce so smugly? If so, it has been such "greed" that has repeatedly brought prices down and thereby brought the American standard of living up.

Back at the beginning of the 20th century, only 15 percent of American families had a flush toilet. Not quite one-fourth had running water. Only three percent had electricity and one percent had central heating. Only one American family in a hundred owned an automobile.

By 1970, the vast majority of those American families who were living in poverty had flush toilets, running water and electricity. By the end of the twentieth century, more Americans were connected to the Internet than were connected to a water pipe or a sewage line at the beginning of the century.

More families have air-conditioning today than had electricity then. Today, more than half of all families with incomes below the official poverty line own a car or truck and have a microwave.

This didn't come about because of the politicians, bureaucrats, activists or others in "public service" that you are supposed to admire. No nation ever protested its way from poverty to prosperity or got there through rhetoric or bureaucracies.

It was Thomas Edison who brought us electricity, not the Sierra Club. It was the Wright brothers who got us off the ground, not the Federal Aviation Administration. It was Henry Ford who ended the isolation of millions of Americans by making the automobile affordable, not Ralph Nader.

Those who have helped the poor the most have not been those who have gone around loudly expressing "compassion" for the poor, but those who found ways to make industry more productive and distribution more efficient, so that the poor of today can afford things that the affluent of yesterday could only dream about.

The wonderful places where you are supposed to go to do "public service" are as sheltered from the brutal test of reality as you have been on this campus for the last four— or is it six?— years. In these little cocoons, all that matters is how well you talk the talk. People who go into the marketplace have to walk the walk.

Colleges can teach many valuable skills, but they can also nourish many dangerous illusions. If you really want to be of service to others, then let them decide what is a service by whether they choose to spend their hard-earned money for it.

Thomas Sowell Quotes

Thomas Sowell has been featured numerous times on this blog - he has an amazing ability to simplify complicated issues and provide context to evaluate policy proposals.

Sowell announced his retirement last weekend.  In honor of his retirement, Townhall.com compiled a 'best of' collection of his thoughts over the years...

1. People who enjoy meetings should not be in charge of anything.

2. If you have always believed that everyone should play by the same rules and be judged by the same standards, that would have gotten you labeled a radical 60 years ago, a liberal 30 years ago and a racist today.

3. Immigration laws are the only laws that are discussed in terms of how to help people who break them.

4. Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.

5. The next time some academics tell you how important diversity is, ask how many Republicans there are in their sociology department.

6. The most basic question is not what is best, but who shall decide what is best.

7. The biggest and most deadly 'tax' rate on the poor comes from a loss of various welfare state benefits - food stamps, housing subsidies and the like - if their income goes up.

8. The real minimum wage is zero.

9. What 'multiculturalism' boils down to is that you can praise any culture in the world except Western culture - and you cannot blame any culture in the world except Western culture.

10. In liberal logic, if life is unfair then the answer is to turn more tax money over to politicians, to spend in ways that will increase their chances of getting reelected.

11. People who have time on their hands will inevitably waste the time of people who have work to do.

12. Elections should be held on April 16th- the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders.

Sowell: Football and Fallacies

Football and Fallacies


Thomas Sowell
Posted: Nov 23, 2016 7:11 PM



This is a football story with both political and legal implications.

It was fourth down in a National Football League game, and the punting team came onto the field. The other team went into their formation to defend against the punt. Then somebody noticed that the man set to kick the punt was black.

"Fake!" one of the defenders cried out. That cry was immediately echoed by others, and the defending team changed their formation, to guard against the kicker either running with the ball or throwing it. But in fact he punted.

Why did anyone think he was not going to punt the ball? Because chances are no one on that field had ever seen a black football player kick a punt. As someone who has watched NFL games for half a century, I have never seen a black player either punt the ball, or kick a field goal or a point after touchdown.

I have seen hundreds of black players score touchdowns, but not one kick the point afterwards. I have seen a black President of the United States before I have seen a black kicker in the NFL.

Politicians, the intelligentsia and even the Supreme Court of the United States have been saying for decades that statistical disparities between racial groups indicate discrimination. If so, then the racial disparities among kickers in professional football exceed that in virtually any other job anywhere.

But is it discrimination? The very same people who employ blacks at every other position on a football team are the people who hire kickers. Why would they be willing to hire black players in other positions that pay a lot more money than most kickers get, but draw the line at hiring black kickers?

In this situation, discrimination is an explanation that doesn't even meet the test of plausibility.

At the other end of the ideological spectrum, there are those who attribute differences in racial representation to genetics. Are blacks genetically incapable of kicking a football? Somehow black colleges have been playing football for generations, without having to recruit white players to do the kicking.

But if neither race nor racism can explain why black kickers are so rare in professional football, what can possibly explain it? One of the most obvious possibilities is routinely ignored in many cases of group disparities: Different individuals and groups have different things they want to do.

If black youngsters who are dreaming of an athletic career don't happen to be dreaming of becoming kickers, then it doesn't matter whether they have both the innate ability and the opportunity.

It is very doubtful if any of the guys who grew up in my old neighborhood in Harlem ever became ballet dancers. Is that because black guys can't dance? Some of the best male tap dancers have been black. Is it because nobody would hire black male dancers? Some black male tap dancers have starred on the stage and danced in movies. Just not in ballets.

Many of us have been so brainwashed over the years -- by sheer repetition, rather than by either logic or empirical tests -- that statistical disparities are automatically taken to mean discrimination, whether between races, sexes or whatever.

The plain fact that different individuals and groups make different choices is resolutely ignored, because it does not fit the prevailing preconceptions, or the crusades based on those preconceptions.

Women make different career choices than men, and wisely so, because men do not become mothers, and being a mother is not the same as being a father. And we can't make them the same by simply calling them both "parents" or saying that "the couple" is pregnant.

Discrimination can certainly cause statistical disparities. But statistical disparities do not automatically mean discrimination.

When some racial or ethnic groups have a median age that is 20 years older than the median age of some other racial or ethnic groups, how surprised should we be to find members of the younger groups far better represented in sports and members of the older groups far better represented in jobs that require long years of experience?

Statistics are no substitute for thought -- certainly not in government policies, and especially not in Supreme Court decisions.

Socialism for the Uninformed

By Thomas Sowell
May 31, 2016

Socialism sounds great. It has always sounded great. And it will probably always continue to sound great. It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster.

While throngs of young people are cheering loudly for avowed socialist Bernie Sanders, socialism has turned oil-rich Venezuela into a place where there are shortages of everything from toilet paper to beer, where electricity keeps shutting down, and where there are long lines of people hoping to get food, people complaining that they cannot feed their families.

With national income going down, and prices going up under triple-digit inflation in Venezuela, these complaints are by no means frivolous. But it is doubtful if the young people cheering for Bernie Sanders have even heard of such things, whether in Venezuela or in other countries around the world that have turned their economies over to politicians and bureaucrats to run.

The anti-capitalist policies in Venezuela have worked so well that the number of companies in Venezuela is now a fraction of what it once was. That should certainly reduce capitalist "exploitation," shouldn't it?

But people who attribute income inequality to capitalists exploiting workers, as Karl Marx claimed, never seem to get around to testing that belief against facts -- such as the fact that none of the Marxist regimes around the world has ever had as high a standard of living for working people as there is in many capitalist countries.
 
Facts are seldom allowed to contaminate the beautiful vision of the left. What matters to the true believers are the ringing slogans, endlessly repeated.

When Senator Sanders cries, "The system is rigged!" no one asks, "Just what specifically does that mean?" or "What facts do you have to back that up?"

In 2015, the 400 richest people in the world had net losses of $19 billion. If they had rigged the system, surely they could have rigged it better than that.

But the very idea of subjecting their pet notions to the test of hard facts will probably not even occur to those who are cheering for socialism and for other bright ideas of the political left.

How many of the people who are demanding an increase in the minimum wage have ever bothered to check what actually happens when higher minimum wages are imposed? More often they just assume what is assumed by like-minded peers -- sometimes known as "everybody," with their assumptions being what "everybody knows."

Back in 1948, when inflation had rendered meaningless the minimum wage established a decade earlier, the unemployment rate among 16-17-year-old black males was under 10 percent. But after the minimum wage was raised repeatedly to keep up with inflation, the unemployment rate for black males that age was never under 30 percent for more than 20 consecutive years, from 1971 through 1994. In many of those years, the unemployment rate for black youngsters that age exceeded 40 percent and, for a couple of years, it exceeded 50 percent.

The damage is even greater than these statistics might suggest. Most low-wage jobs are entry-level jobs that young people move up out of, after acquiring work experience and a track record that makes them eligible for better jobs. But you can't move up the ladder if you don't get on the ladder.

The great promise of socialism is something for nothing. It is one of the signs of today's dumbed-down education that so many college students seem to think that the cost of their education should -- and will -- be paid by raising taxes on "the rich."

Here again, just a little check of the facts would reveal that higher tax rates on upper-income earners do not automatically translate into more tax revenue coming in to the government. Often high tax rates have led to less revenue than lower tax rates.

In a globalized economy, high tax rates may just lead investors to invest in other countries with lower tax rates. That means that jobs created by those investments will be overseas.

None of this is rocket science. But you do have to stop and think -- and that is what too many of our schools and colleges are failing to teach their students to do.

The Lure of Socialism

The Lure of Socialism Thomas Sowell | Feb 17, 2016




Many people of mature years are amazed at how many young people have voted for Senator Bernie Sanders, and are enthusiastic about the socialism he preaches.

Many of those older people have lived long enough to have seen socialism fail, time and again, in countries around the world. Venezuela, with all its rich oil resources, is currently on the verge of economic collapse, after its heady fling with socialism.

But, most of the young have missed all that, and their dumbed-down education is far more likely to present the inspiring rhetoric of socialism than to present its dismal track record.

Socialism is in fact a wonderful vision -- a world of the imagination far better than any place anywhere in the real world, at any time over the thousands of years of recorded history. Even many conservatives would probably prefer to live in such a world, if they thought it was possible.

Who would not want to live in a world where college was free, along with many other things, and where government protected us from the shocks of life and guaranteed our happiness? It would be Disneyland for adults!

Free college of course has an appeal to the young, especially those who have never studied economics. But college cannot possibly be free. It would not be free even if there was no such thing as money.

Consider the costs of just one professor teaching just one course. He or she has probably spent more than 20 years being educated, from kindergarten to the Ph.D., before ending up standing in front of a class and trying to convey some of the knowledge picked up in all those years. That means being fed, clothed and housed all those years, along with other expenses.

All the people who grew the food, manufactured the clothing and built the housing used by this one professor, for at least two decades, had to be compensated for their efforts, or those efforts would not continue. And of course someone has to produce food, clothing and shelter for all the students in this one course, as well as books, computers and other requirements or amenities.

Add up all these costs -- and multiply by a hundred or so -- and you have a rough idea of what going to college costs. Whether these costs are paid by using money in a capitalist economy or by some other mechanism in a feudal economy, a socialist economy, or whatever, there are heavy costs to pay.

Moreover, under any economic system, those costs are either going to be paid or there are not going to be any colleges. Money is just an artificial device for getting real things done.

Those young people who understand this, whether clearly or vaguely, are not likely to be deterred from wanting socialism. Because what they really want is for somebody else to pay for their decision to go to college.

A market economy is one in which whoever makes a decision is the one who pays for that decision. It forces people to be sure that what they want to do is really worth what it is going to cost.

Even the existing subsidies of college have led many people to go to college who have very little interest in, or benefit from, going to college, except for enjoying the social scene while postponing adult responsibilities for a few years.

Whether judging by test results, by number of hours per week devoted to studying or by on-campus interviews, it is clear that today's college students learn a lot less than college students once did. If college becomes "free," even more people can attend college without bothering to become educated and without acquiring re any economically meaningful skills.

More fundamentally, making all sorts of other things "free" means more of those things being wasted as well. Even worse, it means putting more and more of the decisions that shape our lives into the hands of politicians and bureaucrats who control the purse strings.

Obamacare has given us a foretaste of what that means in reality, despite how wonderful it may sound in political rhetoric.

Worst of all, government giveaways polarize society into segments, each trying to get what it wants at somebody else's expense, creating mutual bitterness that can tear a society apart. Some seem to blithely assume that "the rich" can be taxed to pay for what they want -- as if "the rich" don't see what is coming and take their wealth elsewhere.

Hillary 2.0

Hillary 2.0
Thomas Sowell |
Oct 27, 2015





Many people may share Senator Bernie Sanders' complaint that he was tired of hearing about Hillary Clinton's e-mails. But the controversy is about issues far bigger than e-mails.

One issue is the utter disaster created by the Obama administration's foreign policy in Libya, carried out by Hillary Clinton as Secretary of State.

An even bigger issue is whether high officials of government can ignore the law and refuse to produce evidence when it is subpoenaed. If they can, then the whole separation of powers -- the checks and balances in the Constitution -- gives way to arbitrary government by corrupt officials who are accountable to no one.

This is not the first time Hillary Clinton has defied the law to cover up what she had done. When Bill Clinton was president, back in the 1990s, both he and Hillary developed the strategy of responding to charges of illegal actions on their part by stalling and stonewalling when either courts or Congress tried to get them to produce documents related to these charges.

Hillary claimed then, as now, that key documents had disappeared. Her more recent claim that many of her e-mails had been deleted was just Hillary 2.0. Only after three years of stalling and stonewalling on her part has the fact finally come out this year that those e-mails could be recovered, and now have been.

By this time, however, Hillary and her supporters used the same tactics that both Clintons used back in the 1990s -- namely, saying that this was old news, stuff that had already been investigated too long, that it was time to "move on."

That was Hillary 1.0. More recently Hillary 2.0 said, melodramatically, "What difference, at this point, does it make?"

One of the things that the former Secretary of State was now trying to cover up was the utter disaster of the Obama administration's foreign policy that she carried out in Libya.

Having intervened in Libya to help overthrow the government of Muammar Qaddafi, who was no threat to America's interests in the Middle East, the Obama administration was confronted with the fact that Qaddafi's ouster simply threw the country into such chaos that Islamic terrorists were now able to operate freely in Libya.

Just how freely was shown in September 2012, when terrorists stormed the compound in Benghazi where the American ambassador to Libya, Christopher Stevens, was staying. They murdered him and three other Americans who tried to defend him.

Moreover, the terrorists did not even have to go into hiding afterwards, and at least one of them was interviewed by journalists. That's how chaotic Libya had become.

Meanwhile, there was an American presidential election campaign in 2012, and Barack Obama was presenting himself to the voters as someone who had defeated Al Qaeda and suppressed the terrorist threat in the Middle East.

Obviously the truth about this attack could have totally undermined the image that Obama was trying to project during the election campaign, and perhaps cost him the White House. So a lie was concocted instead.

The lie was that the attack was not by terrorists -- who supposedly had been suppressed by Obama -- but was a spontaneous protest demonstration against an American video insulting Islam, and that protest just got out of control.

Now that Hillary Clinton's e-mails have finally been recovered and revealed, after three years of stalling and stonewalling, they showed explicitly that she knew from the outset that the attack that killed Ambassador Stevens and others was not a result of some video but was a coordinated terrorist operation.

Nevertheless, Hillary 2.0, along with President Obama and national security advisor Susan Rice, told the world in 2012 that the deaths in Benghazi were due to the video, not a terrorist organization that was now operating freely in Libya, thanks to the policy that got rid of the Qaddafi government.

Yet that key fact was treated by the media as old news, and what was exciting now was how well Hillary 2.0 outperformed the Congressional committee on television. If the corruption and undermining of the American system of Constitutional government eventually costs us our freedom, will the media say, "What difference does it make now?"

Politicians' Words

Politicians' Words
Thomas Sowell | Oct 21, 2015



At the recent televised debate among candidates for the Democrats' nomination for president, Hillary Clinton declared that "the wealthy pay too little" in taxes and "the middle class pays too much."

Some people might wish to argue about whether that is true or not, but no rational argument can be made on either side of this issue, because the words used are completely undefined. Nor is Hillary Clinton the only one who talks this way.

It is one of the many signs of the mindlessness of our times that all sorts of people declare that "the rich" are not paying their "fair share" in taxes, without telling us concretely what they mean by either "the rich" or "fair share."

Whether in politics or in the media, words are increasingly used, not to convey facts or even allegations of facts, but simply to arouse emotions. Undefined words are a big handicap in logic, but they are a big plus in politics, where the goal is not clarity but victory -- and the votes of gullible people count just as much as the votes of people who have common sense.

What a "fair share" of taxes means in practice is simply "more." No matter how high the tax rate is on people with a given income, you can always raise the tax rate further by saying that they are still not paying their "fair share."

Advocates of higher tax rates can get very specific when they want to. A recent article in the New York Times says that raising the tax rate on the top one percent of income earners to 40 percent would generate "about $157 billion" a year in additional tax revenue for the government.

This ignores mountains of evidence, going back for generations, showing that raising tax rates does not automatically mean raising tax revenues -- and has often actually led to falling tax revenues. A fantasy expressed in numbers is still a fantasy.

When the state of Maryland raised its tax rate on people with incomes of a million dollars a year or more, the number of such people living in Maryland fell from nearly 8,000 to fewer than 6,000. Although it had been projected that the tax revenue collected from such people in Maryland would rise by $106 million, instead these revenues FELL by $257 million.

There was a similar reaction in Oregon and in Britain. Rich people do not simply stand still to be sheared like sheep. They can either send their money somewhere else or they can leave themselves.

Currently, there are trillions of dollars of American money creating jobs overseas, in places where tax rates are lower. It is easy to transfer money electronically from country to country. But it is not nearly so easy for unemployed American workers to transfer themselves to where the jobs have been driven by high tax rates.

Conversely, there have been some reductions in high tax rates that brought in more tax revenues at the lower rates. This happened as far back as the Coolidge administration in the 1920s. It also happened in the Kennedy administration in the 1960s, the Reagan administration in the 1980s and most recently in the Bush 43 administration. There was a similar reaction in Iceland.

There is nothing inevitable about either a higher or a lower amount of tax revenues, whether the tax rate is raised or lowered. The government can only set tax rates. How that will affect the tax revenues actually received depends on how people react, and you can know that only after the fact. Sophisticated projections have often been laughably wrong.

Contrary to the way some people on the left conceive of the world, neither rich people nor poor people are inert blocks of wood, to be moved about like pieces on a chess board, to carry out some grand design from on high.

Even outright confiscations of people's wealth, including whole industries in some countries, have failed to spread prosperity, and have even led to collapsing economies.

But politics is not about what happened in the past. That is left for historians. What politicians are interested in is what they can get the public to believe in the present and to vote on in the future. Plans to "soak the rich," who are not paying their "fair share," have worked politically, time and time again -- and may well work yet again in the 2016 elections.

Charlatans and Sheep

 Thomas' anectdotes about Hispanic baseball players and Indian spelling bee champions is thought-provoking.  The fact that some groups over-index in certain populations is never attributed to discrimination (nor should it - that would be ridiculous).  Why is it different in any other performance-based population (school & work)?

Charlatans and Sheep

Thomas Sowell | Oct 06, 2015




One of the many painful signs of the mindlessness of our times was a recent section of the Wall Street Journal, built around the theme "What's Holding Women Back in the Workplace?"

Whenever some group is not equally represented in some institution or activity, the automatic response in some quarters is to assume that someone has prevented equality of outcomes.

This preconception of equal outcomes requires not one speck of evidence, and defies mountains of evidence to the contrary. Even in activities where individual performances are what determine outcomes, and those performances are easily measured objectively, there is seldom anything resembling equal representation.

For 12 consecutive years -- from 2001 through 2012 -- each home run leader in the American League had a Hispanic surname. When two American boys whose ancestors came from India tied for first place in the U.S. National Spelling Bee in 2014, it was the 7th consecutive year in which the U.S. National Spelling Bee was won by an Asian Indian.

We all know about the large over-representation of blacks among professional basketball players, and especially among the star players. The best-selling brands of beer in America were created by people of German ancestry, who also created China's famed Tsingtao beer. Of the 100 top-ranked Marathon runners in the world in 2012, 68 were Kenyans. The list could go on and on. Although blacks are over-represented among professional football players, even the most avid National Football League fan is unlikely to be able to recall seeing even one black player who kicked a punt or a point after touchdown.

Should there be an article titled: "What's Holding Black Kickers Back in the NFL?" Could it be that blacks are more interested in playing positions where there is more action and -- not incidentally -- more money?

Should there be an article titled: "What's Holding Back Whites in the National Basketball Association?" Or an article titled: "What's Holding Back Non-Asian Indian Kids from Winning the Spelling Bee?" Lawsuits claiming discrimination have been won on the basis of statistical disparities far smaller than these.

Among the many reasons for gross disparities in many fields, and at different income levels, is that human beings differ in what they want to do, quite aside from any differences in what they are capable of doing, or what others permit them to do. Observers cannot just grab a statistic and run with it, though that is what is done too often in the media -- and even in courts of law.

Particular opportunities are seized by some groups and used to rise from poverty to prosperity. But, for other groups, those same opportunities might as well not exist, because other groups are oriented in different directions, and those opportunities might not even catch their attention.

As regards statistical disparities in the representation of women in various occupations or at different income levels, a number of outstanding female scholars, including Professor Claudia Goldin of Harvard, have shown many ways in which women's circumstances and priorities differ from those of men.

Men, for example, don't get pregnant. And where children are raised by a single parent, that parent is a mother far more often than a father. You cannot work the 60-hour weeks that are needed to reach the top in some fields when you have children to raise.

But we seldom hear about such facts, while we constantly hear charlatans loudly proclaiming numerical "gender gaps" in employment or pay, and suing for discrimination.

Charlatans are only half the story. The other half includes people who are gullible enough to be led around like sheep by those exploiting the prevailing political correctness dispensed in our schools, colleges and the media.

Moreover, the sheep in both high and low positions often also implicitly believe that the cause of statistical disparities must have originated wherever the statistics were collected, and therefore must be the fault of the employer -- even though the factors behind those disparities may have originated far from the employer and long before the people involved reached the employer.

So long as there is widespread gullibility, there will be charlatans ready to exploit it for their own benefit, either politically or financially.

The 'Affordable Housing' Fraud

The 'Affordable Housing' Fraud
Thomas Sowell | Sep 29, 2015




Nowhere has there been so much hand-wringing over a lack of "affordable housing," as among politicians and others in coastal California. And nobody has done more to make housing unaffordable than those same politicians and their supporters.

A recent survey showed that the average monthly rent for a one-bedroom apartment in San Francisco was just over $3,500. Some people are paying $1,800 a month just to rent a bunk bed in a San Francisco apartment.

It is not just in San Francisco that putting a roof over your head can take a big chunk out of your pay check. The whole Bay Area is like that. Thirty miles away, Palo Alto home prices are similarly unbelievable.

One house in Palo Alto, built more than 70 years ago, and just over one thousand square feet in size, was offered for sale at $1.5 million. And most asking prices are bid up further in such places.

Another city in the Bay Area with astronomical housing prices, San Mateo, recently held a public meeting and appointed a task force to look into the issue of "affordable housing."

Public meetings, task forces and political hand-wringing about a need for "affordable housing" occur all up and down the San Francisco peninsula, because this is supposed to be such a "complex" issue.

Someone once told President Ronald Reagan that a solution to some controversial issue was "complex." President Reagan replied that the issue was in fact simple, "but it is not easy."

Is the solution to unaffordable housing prices in parts of California simple? Yes. It is as simple as supply and demand. What gets complicated is evading the obvious, because it is politically painful.

One of the first things taught in an introductory economics course is supply and demand. When a growing population creates a growing demand for housing, and the government blocks housing from being built, the price of existing housing goes up.

This is not a breakthrough on the frontiers of knowledge. Economists have understood supply and demand for centuries -- and so have many other people who never studied economics.

Housing prices in San Francisco, and in many other communities for miles around, were once no higher than in the rest of the United States. But, beginning in the 1970s, housing prices in these communities skyrocketed to three or four times the national average.

Why? Because local government laws and policies severely restricted, or banned outright, the building of anything on vast areas of land. This is called preserving "open space," and "open space" has become almost a cult obsession among self-righteous environmental activists, many of whom are sufficiently affluent that they don't have to worry about housing prices.

Some others have bought the argument that there is just very little land left in coastal California, on which to build homes. But anyone who drives down Highway 280 for thirty miles or so from San Francisco to Palo Alto, will see mile after mile of vast areas of land with not a building or a house in sight.

How "complex" is it to figure out that letting people build homes in some of that vast expanse of "open space" would keep housing from becoming "unaffordable"?

Was it just a big coincidence that housing prices in coastal California began skyrocketing in the 1970s, when building bans spread like wildfire under the banner of "open space," "saving farmland," or whatever other slogans would impress the gullible?

When more than half the land in San Mateo County is legally off-limits to building, how surprised should we be that housing prices in the city of San Mateo are now so high that politically appointed task forces have to be formed to solve the "complex" question of how things got to be the way they are and what to do about it?

However simple the answer, it will not be easy to go against the organized, self-righteous activists for whom "open space" is a sacred cause, automatically overriding the interests of everybody else.

Was it just a coincidence that some other parts of the country saw skyrocketing housing prices when similar severe restrictions on building went into effect? Or that similar policies in other countries have had the same effect? How "complex" is that?

'Just Asking'

'Just Asking'

Thomas Sowell

May 19, 2015



In a recent panel discussion on poverty at Georgetown University, President Barack Obama gave another demonstration of his mastery of rhetoric -- and disregard of reality.

One of the ways of fighting poverty, he proposed, was to "ask from society's lottery winners" that they make a "modest investment" in government programs to help the poor.

Since free speech is guaranteed to everyone by the First Amendment to the Constitution, there is nothing to prevent anybody from asking anything from anybody else. But the federal government does not just "ask" for money. It takes the money it wants in taxes, usually before the people who have earned it see their paychecks.

Despite pious rhetoric on the left about "asking" the more fortunate for more money, the government does not "ask" anything. It seizes what it wants by force. If you don't pay up, it can take not only your paycheck, it can seize your bank account, put a lien on your home and/or put you in federal prison.

So please don't insult our intelligence by talking piously about "asking."

And please don't call the government's pouring trillions of tax dollars down a bottomless pit "investment." Remember the soaring words from Barack Obama, in his early days in the White House, about "investing in the industries of the future"? After Solyndra and other companies in which he "invested" the taxpayers' money went bankrupt, we haven't heard those soaring words so much.

Then there are those who produced the wealth that politicians want to grab. In Obama's rhetoric, these producers are called "society's lottery winners."

Was Bill Gates a lottery winner? Or did he produce and sell a computer operating system that allows billions of people around the world to use computers, without knowing anything about the inner workings of this complex technology?

Was Henry Ford a lottery winner? Or did he revolutionize the production of automobiles, bringing the price down to the point where cars were no longer luxuries of the rich but vehicles that millions of ordinary people could afford, greatly expanding the scope of their lives?

Most people who want to redistribute wealth don't want to talk about how that wealth was produced in the first place. They just want "the rich" to pay their undefined "fair share" of taxes. This "fair share" must remain undefined because all it really means is "more."

Once you have defined it -- whether at 30 percent, 60 percent or 90 percent -- you wouldn't be able to come back for more.

Obama goes further than other income redistributionists. "You didn't build that!" he declared to those who did. Why? Because those who created additions to the world's wealth used government-built roads or other government-provided services to market their products.

And who paid for those roads and other government-provided services if not the taxpayers? Since all other taxpayers, as well as non-taxpayers, also use government facilities, why are those who created private wealth not to use them also, since they are taxpayers as well?

The fact that most of the rhetorical ploys used by Barack Obama and other redistributionists will not stand up under scrutiny means very little politically. After all, how many people who come out of our schools and colleges today are capable of critical scrutiny?

When all else fails, redistributionists can say, as Obama did at Georgetown University, that "coldhearted, free-market capitalist types" are people who "pretty much have more than you'll ever be able to use and your family will ever be able to use," so they should let the government take that extra money to help the poor.

Slippery use of the word "use" seems to confine it to personal consumption. The real question is whether the investment of wealth is likely to be done better by those who created that wealth in the first place or by politicians. The track record of politicians hardly suggests that turning ever more of a nation's wealth over to them is likely to turn out well.

It certainly has not turned out well in the American economy under Barack Obama.

Minimum Wage & Ruinous 'Compassion'

Ruinous 'Compassion'

Thomas Sowell 

Mar 18, 2015




It is fascinating to see brilliant people belatedly discover the obvious -- and to see an even larger number of brilliant people never discover the obvious.

A recent story in a San Francisco newspaper says that some restaurants and grocery stores in Oakland's Chinatown have closed after the city's minimum wage was raised. Other small businesses there are not sure they are going to survive, since many depend on a thin profit margin and a high volume of sales.

At an angry meeting between local small business owners and city officials, the local organization that had campaigned for the higher minimum wage was absent. They were probably some place congratulating themselves on having passed a humane "living wage" law. The group most affected was also absent -- inexperienced and unskilled young people, who need a job to get some experience, even more than they need the money.

It is not a breakthrough on the frontiers of knowledge that minimum wage laws reduce employment opportunities for the young and the unskilled of any age. It has been happening around the world, for generation after generation, and in the most diverse countries.

It is not just the young who are affected when minimum wage rates are set according to the fashionable notions of third parties, with little or no regard for whether everyone is productive enough to be worth paying the minimum wage they set.

You can check this out for yourself. Go to your local public library and pick up a copy of the distinguished British magazine "The Economist."

Whether it is the current issue or a back issue doesn't matter. Spain, Greece and South Africa will be easy to locate in the table near the back, which lists data for various countries. Just look down the unemployment column for countries with unemployment rates around 25 percent. Spain, Greece and South Africa are always there, whether or not there is a recession. Why? Because they have very generous minimum wage laws.

While you are there, you can look up the unemployment rate for Switzerland, which has no minimum wage law at all. Over the years, I have never seen the unemployment rate in Switzerland reach as high as 4 percent. Back in 2003, "The Economist" magazine reported: "Switzerland's unemployment neared a five-year high of 3.9% in February."

In the United States, back in what liberals think of as the bad old days before there was a federal minimum wage law, the annual unemployment rate during Calvin Coolidge's last four years as president ranged from a high of 4.2 percent to a low of 1.8 percent.

Low-income minorities are often hardest hit by the unemployment that follows in the wake of minimum wage laws. The last year when the black unemployment rate was lower than the white unemployment rate was 1930, the last year before there was a federal minimum wage law.

The following year, the Davis-Bacon Act of 1931 was passed, requiring minimum wages in the construction industry. This was in response to complaints that construction companies with non-union black construction workers were able to underbid construction companies with unionized white workers (whose unions would not admit blacks).

Looking back over my own life, I realize now how lucky I was when I left home in 1948, at the age of 17, to become self-supporting. The unemployment rate for 16- and 17-year-old blacks at that time was under 10 percent. Inflation had made the minimum wage law, passed ten years earlier, irrelevant.

But it was only a matter of time before liberal compassion led to repeated increases in the minimum wage, to keep up with inflation. The annual unemployment rate for black teenagers has never been less than 20 percent in the past 50 years, and has ranged as high as over 50 percent.

You can check these numbers in a table of official government statistics on page 42 of Professor Walter Williams' book "Race and Economics."

Incidentally, the black-white gap in unemployment rates for 16-year-olds and 17-year-olds was virtually non-existent back in 1948. But the black teenage unemployment rate has been more than double that for white teenagers for every year since 1971.

This is just one of many policies that allow liberals to go around feeling good about themselves, while leaving havoc in their wake