Chill Out

Chill Out

By John Stossel - January 22, 2014

The Hill, the newspaper that covers Congress, says this year, there will be a major policy battle over "climate change." Why?

We already waste billions on pointless gestures that make people think we're addressing global warming, but the earth doesn't notice or care.

What exactly is "global warming" anyway?  That's really four questions:

1. Is the globe warming? Probably. Global temperatures have risen (but not in the last 15 years). Climate changes. Always has. Always will.  In the 1970s, scientists were warning about global cooling. 

2. Is the warming caused by man? Maybe. There's decent evidence that at least some of it is.

3. But is global warming a crisis? Far from it. It's possible that it will become a crisis.

Some computer models suggest big problems, but the models aren't very accurate. Some turned out to be utterly wrong. Clueless scaremongers like Sen. Barbara Boxer, D-Cal., seize on weather disasters to blame man's carbon output. After Oklahoma's tragic tornadoes last year, Boxer stood on the floor of the Senate and shrieked, "Carbon could cost us the planet!" But there were actually fewer tornadoes last summer.

4. If the globe is warming, can America do anything about it? No. What we do now is pointless. I feel righteous riding my bike to work. That's just shallow. Even if all Americans replaced cars with bicycles, switched to fluorescent light bulbs, got solar water heaters, etc., it would have no discernible effect on the climate. China builds a new coal-fueled power plant almost every week; each one obliterates any carbon reduction from all our windmills and solar panels.

Weirdly, the only thing that's reduced America's carbon output has been our increased use of natural gas (it releases less greenhouse gas than oil and coal). But many environmentalists fight the fracking that produces it.

Someday, we'll probably invent technology that could reduce man's greenhouse gas creation, but we're nowhere close to it now. Rather than punish poor people with higher taxes on carbon and award ludicrous subsidies to Al Gore's "green" investments, we should wait for the science to advance.

If serious warming happens, we can adjust, as we've adjusted to big changes throughout history. It will be easier to adjust if America is not broke after wasting our resources on trendy gimmicks like windmills.

Environmental activists say that if we don't love their regulations, we "don't care about the earth." Bunk. We can love nature and still hate the tyranny of bureaucrats' rules.

We do need some rules. It's good that government built sewage treatment plants. Today, the rivers around Manhattan are so clean that I swim in them. It's good that we forced industry to stop polluting the air. Scrubbers in smokestacks and catalytic converters on cars made our lives better. The air gets cleaner every time someone replaces an old car with a new one.

But those were measures against real pollution -- soot, particulates, sulfur, etc. What global warming hysterics want to fight is merely carbon dioxide. That's what plants breathe. CO2 may prove to be a problem, but we don't know that now.

The world has real problems, though: malaria, malnutrition, desperate poverty. Our own country, while relatively rich, is deep in debt. Obsessing about greenhouse gases makes it harder to address these more serious problems.

Environmentalists assume that as people get richer and use more energy, they pollute more. The opposite is true. As nations industrialize, they pay more attention to pollution. Around the world, it's the most prosperous nations that now have the cleanest air and water.

Industrialization allows people to use fewer resources. Instead of burning trees for power, we make electricity from natural gas. We figure out how to get more food from smaller pieces of land.

And one day we'll probably even invent energy sources more efficient than oil and gas. We'll use them because they're cost-effective, not because government forces us to.

So let's chill out about global warming. We don't need more micromanagement from government. We need less.

Then free people -- and rapidly increasing prosperity -- will create a better world. 

Inconvenient Facts

The pay disparity facts are most important aspects of this article - the rest is basically just mud-throwing...

Fact-Free Liberals

By Thomas Sowell - January 21, 2014

Someone summarized Barack Obama in three words -- "educated," "smart" and "ignorant." Unfortunately, those same three words would describe all too many of the people who come out of our most prestigious colleges and universities today.

President Obama seems completely unaware of how many of the policies he is trying to impose have been tried before, in many times and places around the world, and have failed time and again. Economic equality?

That was tried in the 19th century, in communities set up by Robert Owen, the man who coined the term "socialism".  Those communities all collapsed.

It was tried even earlier, in 18th century Georgia, when that was a British colony. People in Georgia ended up fleeing to other colonies, as many other people would vote with their feet in the 20th century, by fleeing many other societies around the world that were established in the name of economic equality.

But who reads history these days? Moreover, those parts of history that would undermine the vision of the left -- which prevails in our education system from elementary school to postgraduate study -- are not likely to get much attention.

The net results are bright people, with impressive degrees, who have been told for years how brilliant they are, but who are often ignorant of facts that might cause them to question what they have been indoctrinated with in schools and colleges.

Recently Kirsten Powers repeated on Fox News Channel the discredited claim that women are paid only about three-quarters of what a man is paid for doing the same work.

But there have been empirical studies, going back for decades, showing that there is no such gap when the women and men are in the same occupation, with the same skills, experience, education, hours of work and continuous years of full-time work.

Income differences between the sexes reflect the fact that women and men differ in all these things -- and more. Young male doctors earn much more than young female doctors. But young male doctors work over 500 hours a year more than young female doctors.

Then there is the current hysteria which claims that people in the famous "top one percent" have incomes that are rising sharply and absorbing a wholly disproportionate share of all the income in the country.

But check out a Treasury Department study titled "Income Mobility in the U.S. from 1996 to 2005." It uses income tax data, showing that people who were in the top one percent in 1996 had their incomes fall -- repeat, fall -- by 26 percent by 2005.

What about the other studies that seem to say the opposite? Those are studies of income brackets, not studies of the flesh-and-blood human beings who are moving from one bracket to another over time. More than half the people who were in the top one percent in 1996 were no longer there in 2005.

This is hardly surprising when you consider that their incomes were going down while there was widespread hysteria over the belief that their incomes were going up.

Empirical studies that follow income brackets over time repeatedly reach opposite conclusions from studies that follow individuals. But people in the media, in politics and even in academia, cite statistics about income brackets as if they are discussing what happens to actual human beings over time.

All too often when liberals cite statistics, they forget the statisticians' warning that correlation is not causation.

For example the New York Times crusaded for government-provided prenatal care, citing the fact that black mothers had prenatal care less often than white mothers -- and that there were higher rates of infant mortality among blacks.

But was correlation causation? American women of Chinese, Japanese and Filipino ancestry also had less prenatal care than whites -- and lower rates of infant mortality than either blacks or whites.

When statistics showed that black applicants for conventional mortgage loans were turned down at twice the rate for white applicants, the media went ballistic crying racial discrimination. But whites were turned down almost twice as often as Asian Americans -- and no one thinks that is racial discrimination.

Facts are not liberals' strong suit. Rhetoric is. 

Read more: http://www.realclearpolitics.com/articles/2014/01/21/fact-free_liberals_121302.html#ixzz2r2rHvjxE 

What If Fetuses Do Feel Pain?

What If Fetuses Do Feel Pain?

Fetal Pain, Maternal Health, And The Supreme Court

By John C. Eastman

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The Supreme Court has in recent years taken great pains to require that execution of criminals who have committed the most heinous of crimes be done as painlessly as possible.  In almost every State that continues to utilize the death penalty as the ultimate punishment, a dose of sodium pentathol is administered first, rendering the convict unconscious so that the actual death-inducing drugs in the common three-drug cocktail do not cause any pain.

No such drugs are administered to an unborn child before a late-term abortion, yet new scientific evidence is pointing to the very real possibility that a fetus feels pain perhaps as early as 16 or 18 weeks gestational age.  One need only read the Supreme Court’s own descriptions of the common “skull-crushing” and “limb-ripping” procedures used beyond the first trimester to realize how horrific the pain must be, if this new scientific evidence proves true.

Other scientific evidence is demonstrating that the risk to maternal health increases exponentially with each passing week later in the pregnancy.

Confronted with this evidence, thirteen states have since 2010 passed laws restricting abortions after 20 weeks to those necessary to prevent death or serious health risks to the mother.  Although abortion advocates have claimed that these laws are “blatantly unconstitutional” because they apply to pre-viability abortions, they have deliberately not challenged the laws in federal circuit court jurisdictions thought likely to uphold the laws.  Nebraska’s first-of-the-kind statute adopted in 2010 remains in effect, for example.  Texas’s statute, adopted over the much ballyhooed filibuster by State Senator Wendy Davis in 2013, likewise remains in effect (the lawsuit brought against that law did not challenge the 20-week restriction).  As one news account noted with respect to the Texas litigation, there was “a strategic reason to avoid challenging that [20-week] ban…. [A] Texas challenge would go to the conservative Fifth Circuit. Not only would that court potentially uphold the law … , the combination of decisions would create a split in the circuits that would make the Supreme Court likelier to hear it.”

But abortion advocates did challenge the 20-week restriction adopted by Arizona.  Arizona is in the Ninth Circuit, which leans decidedly the other direction from the Fifth and Eighth Circuits.  Although the federal trial court upheld the Arizona statute based on the undisputed evidence of fetal pain and increased maternal health risk, the Ninth Circuit reversed, holding that the statute was per se unconstitutional because it restricted abortion prior to fetal viability.  The Supreme Court itself had in 2007 upheld a partial birth abortion ban that admittedly restricted some pre-viability abortions, but the Ninth Circuit held that the viability line nevertheless remained sacrosanct.  Arizona petitioned the Supreme Court for review, but its petition was denied on Monday of this week.

Why are these cases important, and why will the Supreme Court eventually have to confront the issues presented by them?  Well, the evidence that the risk to the health of the mother increases exponentially with every passing week for abortions late in the pregnancy should give pause to any but the most doctrinaire advocates of abortion on demand.  And the evidence that an unborn child in utero feels pain really gives lie to the claim, oft-repeated since Roe v. Wade was decided 41 years ago, that there is no child there, only tissue or a clump of cells.  The science is forcing our society to grapple with the fundamental immorality of abortion on demand that was unleashed by Roe and its companion case, Doe v. Bolton.

Today, the United States is one of only four nations in the world that allows for abortion on demand at any time during pregnancy.  We’re in the company of those great paragons of moral virtue and human rights, North Korea and China.  But the States continue to press the issue because they recognize what the Supreme Court inRoe seems to have forgotten—government has a deep moral obligation to protect the most vulnerable among us.  One of the judges on the Ninth Circuit panel suggested, tongue-in-cheek, that perhaps the states should require that anesthetics be administered to an unborn child in the womb before an abortion can be performed on it.  Such a rule would at least allow the unborn child to escape the pain that the gruesome techniques of late-term abortion would otherwise inflict on him or her.  But it cannot anesthetize the rest of us to the gruesome tragedy of late-term abortion, at least not as long as there is any measure of human decency left among us.

Dr. John C. Eastman, the Henry Salvatori Professor of Law and Community Service at Chapman University’s Dale E. Fowler School of Law, is the founding director of the Claremont Institute’s Center for Constitutional Jurisprudence, in which capacity he served as lead counsel for Arizona in Horne v. Isaacson.

How Government Kills Jobs

How Democrats Kill Jobs

By Richard Epstein - January 15, 2014

The latest government labor report indicates that job growth has slowed once again. It is now at a three-year low, with only an estimated 74,000 new jobs added this past month. To be sure, the nominal unemployment rate dropped to 6.7 percent, but as experts on both the left and the right have noted, the only reason for this “improvement” is the decline of labor force participation, which is at the lowest level since 1978, with little prospect of any short-term improvement.

The Economic Logic of Supply and Demand

One might think that these figures would be taken as evidence that a radical change in course is needed to boost labor market participation. The grounds for that revision rest on a straightforward application of the fundamental economic law of demand: As the cost of labor increases, the demand for labor will decrease. There are, of course, empirical disputes as to just how rapidly wage increases will reduce that demand for labor. 

The federal government has apparently (and foolishly) assumed that these effects will be small, and that the unemployed can somehow be better helped by government interventions into the labor markets. However, only a free market in labor is able to balance changes in both supply and demand, so as to reduce the incidence of unemployment. Government efforts to impose various minimum wages will, happily, have little adverse effect if the market wage is greater than the government mandate. But the same form of increase could have devastating effects on labor markets when the required wage is set too high relative to market wages. The number of workers eager to take jobs at these higher levels will be great, but the number of jobs available at that wage level will shrink. Unemployment levels will increase, and working off the books could increase.

The correct policy choice is strong deregulation of labor markets, which will spur higher labor market participation, albeit at somewhat lower wages. But once people get into the labor force, they can hone their skills in ways that will allow them to command higher wages. Government mandates can never lead to sustainable wage increases. Higher levels of labor productivity can. And this critique of minimum wage laws is equally applicable to other labor market interventions, including overtime rules, family leave statutes, mandatory collective bargaining, and mandated healthcare benefits that likewise distort labor markets.

It is therefore disheartening to observe that the dismal failures in the current labor market have led to renewed calls for further government intervention at both the federal and state levels. More specifically, progressives are calling for a two-pronged program that couples increased unemployment benefits with increased worker protections on all these key fronts. This agenda will only deepen the current malaise.

The Living Wage Comes to de Blasio’s New York

The futility of these policies was made evident by two stories, which appeared side by side in the New York Times last week. The first of these stories carries the headline “After Winning a Raise, 175 Workers At a Queens Casino Lose Their Jobs.” That result would never have happened if the workers had won their raises by demonstrating higher levels of productivity to their employer, The Resorts World Casino. Instead, these wage increases were dictated by a labor arbitrator who doubled the base wages for workers in the casino under the living wage arrangement that he imposed on the firm.

No one should be thrilled that restaurant workers have to settle for wages of $5 per hour plus tips. But a steady job at that level is better than no job at the $12 base pay ordered by the arbitrator. The casino sought to raise food prices to compensate for the increased costs, but the law of demand applies to consumers as well. In hard times, they won’t stand for the increased prices, so the casino closed a food operation that could only operate at a loss, leaving 175 union members to scramble for jobs.

This sobering reality has not made the slightest impression on Mayor Bill de Blasio, who inserted himself strongly into the decision of the New York City Council to elect Melissa Mark-Viverito as its Speaker. Ms. Mark-Viverito served as a top labor union organizer in the healthcare industry before she joined the City Council in 2005, and her defiant acceptance speech echoed the long-term sentiments of de Blasio in seeking greater justice and equality for all New Yorkers. She pushed an agenda that will lead to further debacles in the mold of Resorts World Casino.

At this juncture, there can be no doubt that the control of the City Council has passed from more traditional Democrats, who showed commendable awareness of the downside of aggressive labor market intervention, to firebrands who think that they can help their constituents by initiating legislative warfare against the business interests whose health is essential to job creation in New York City.

The dominant force behind Ms. Mark-Viverito’s rise to power was the Working Families Party, so we can be sure that all restraint has been cast to the wind. The WFP is headed by a shrewd activist and union organizer Dan Cantor, who champions massive government interference in labor and housing markets in New York City. The WFP aggressive agenda calls for the living wage laws on projects that receive City funding, which will translate into fewer projects that the City will be able to afford.

For folks like Dan Cantor and his allies, demand curves do not slope downward, so in their minds the greater burdens on employers will result in simple wealth transfers to workers, without any adverse collateral effects whatsoever, including loss of jobs. That short-sighted thinking is sure to have adverse effects on the economic prospects of New York City. Existing employers may not abandon the City entirely, but they will surely cut back on their operations wherever possible by locating key portions of their businesses in more hospitable jurisdictions. Other investors who might have thought about coming to New York are more likely to look elsewhere. The mindless jubilation of the New York City Council is likely to be curtailed once these dim realities set in.

Congressional Mischief

The economic naiveté in New York City does not stand alone. The same pressures are at work at the federal level as well, where the bad employment numbers have been used to justify further federal intervention into labor markets. A recent angry New York Times editorial is entitled “No Jobs, No Benefits, and Lousy Pay.” As an accurate reflection of the state of the U.S. economy, the title should lead the Times to reconsider the policies that it has long defended in the face of their obvious failure. No such luck: The Times is determined to double-down on policies that have already failed.

It is strongly in favor of the use of long-term unemployment benefits to cushion the blow to those who are unemployed. But it never asks the hard questions about the potential downsides of these programs. This initiative creates an incentive for others to cut back on their search for new jobs. At best, it is just not certain which way the causality runs. Do unemployment benefits create the very risk of long-term unemployment that they are intended to respond to? Do the taxes that are needed to fund these benefits take resources out of the private sector, which helped to drag the rate of job creation to its current low levels?

The same can be said about the Times’ support for sharp increases in the minimum wage laws, which are based on the dubious grounds that the minimum wage historically stood at half the average wages, not the third of averages wages ($7.25 to $20.10) that it stands at today. But the Times offers no explanation as to why that historical ratio supplies the correct normative benchmark for thinking about labor regulation. The closer the minimum wage gets to average wages, the greater its distortions on market activity. Moreover, these distortions will have synergistic interactions with other forms of labor regulation, including the proposals for mandated sick leave with pay, which is high on the WFP’s agenda for New York City. In combination, such policies are likely to further aggravate the effects of government intervention.

That point is, however, totally lost on Ross Eisenbrey of the Economic Policy Institute, which is a faithful backer of additional interference in labor markets. Writing in the Times, he claims that it is now time to expand the Fair Labor Standards Act of 1938 so that it covers a higher percentage of salaried workers. Once again, the historical averages are thought to supply the proper benchmark, and Eisenbrey of course has no trouble establishing that relative to inflation, fewer salaried workers are now exempted from overtime protections, which he regards as a key feature of the labor markets. To be sure, Eisenbrey recognizes that this new turn of the regulatory screw could deter employers from asking workers to work overtime. But he regards that shift as commendable because it could lead in his view to the creation of new jobs to fill the excess demand, which is in line with the views of the 1938 New Deal champions of the bill.

But it is all an exercise in wishful thinking, for there are many other scenarios that could take hold once the overtime limits are done. Eisenbrey does not ask whether it would be exceedingly difficult to add new workers to the mix if there is no place for them to work, whether the cost of additional training makes this option prohibitive, whether the new workers will need to receive costly certifications to take their new positions, or whether the short-term requirements of additional labor makes it unwise to add on workers.

Once these possibilities are on the table, it is clear the rosy predictions of the New Deal managers ignore a range of unpleasant possibilities that could follow from the tightening of overtime rules. For example, some current workers could be sacked from their positions and replaced by a smaller number of higher-salaried workers who are still exempt from these overtime restrictions. Or the business could decide to reduce the scale of operations, costing other workers jobs, because it cannot turn at existing levels of operation once the new restrictions are imposed.

The Better Way: Deregulation

It is just fantasy to think that the addition of any new constraint to labor markets will make matters better than they are. Efforts to make workers better off by making employers worse off will not have their desired effect. It is of course easy to take employers down a notch. But the second half of the program is far harder to implement, given that employers have incentives to minimize their losses from regulation, and will do what it takes to avert the adverse effect of new external constraints.

Labor markets are no different from other markets. They work because they create win/win relationships. In contrast, the government’s regulatory efforts to create win/lose relations will not work. What those efforts will get are the lose/lose scenarios that have been the bitter fruit of recent labor market regulations. 

This article is reprinted from Defining Ideas, a journal of Stanford University's Hoover Institution.

The Real Unemployment Story

Below is a link to a discussion of how the current unemployment number vastly under-estimates actual unemployment be ignoring the number of working-age Americans who have left the workforce.  Today the economy added 74k jobs, and unemployment dropped from 7 to 6.7%.  The only way unemployment decreases with such a small number of jobs is if people give up and leave the workforce and are no longer counted.  Sure enough, 347K people left the work force (some of these are retirements, but still, that's a much larger number than the 74K job added).  The labor force participation rate is now 62.8%, the lowest since 1978.

http://www.epi.org/publication/missing-workers/

Liberalism by gesture

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By George F. Will, Published: January 8

The era of Gesture Liberalism is at hand. It may be more amusing than consequential.

Americans who exercise consumer sovereignty wherever Barack Obama still tolerates it are constantly disappointing him. For generations they persisted in buying what he calls“substandard” policies from what he calls “bad apple” health insurers. They stopped only when he forced them to stop — when he rescued them from their ignorance by banning their benighted preferences.

Have consumers thanked him for trying to wean them from their desire to drive large, useful, comfortable, safe vehicles that he thinks threaten their habitat, Earth? The 2013 numbers tell the tale of their ingratitude. In 2013, for the 32nd consecutive year, the best-selling vehiclewas Ford’s F-Series pickups. This supremacy began, fittingly, in the first year of Ronald Reagan’s deregulatory presidency.

Today’s consumers, who cannot get it through their thick heads that they are supposed to want wee vehicles such as Chevrolet’s Volt, bought 763,402 F-Series trucks. That is 740,308 more than the number of Volts General Motors sold.

In 2010, a GM official carefully said “more than 120,000 potential Volt customers have already signaled interest in the car.”Signaled? How? Not by buying. At the 2013 rate of sales, by 2046 GM will have sold as many Volts as Ford sold F-Series trucks this year. Obama, our Nostradamus, prophesied a million electric cars on U.S. roads by 2015. If so, they will have to outsell F-Series trucks this year.

The sort-of-electric Volt — it is a hybrid — probably is one of those great ideas Joe Biden celebrated in 2010: “Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive.” Government’s incentive for Volt buyers is a tax credit up to $7,500. A 2011 study showed that taxpayer-subsidized Volt or Nissan Leaf buyers had average annual incomes of $150,000, and more than half of them owned at least two other vehicles.

In 2009, the Obama administrationdisapprovingly said: “GM earns a large share of its profits from high-margin trucks and SUVs, which are vulnerable to a continuing shift in consumer preferences to smaller vehicles.” Continuing? A 2011 Wall Street Journal headline: “Americans Embrace SUVs Again.” A Wall Street Journal subhead last week: “U.S. Sales Cruise Back to 2007 Levels, Driven by Fondness for Pickups, SUVs.”

Building the Volt was bankrupt-and-bailed-out GM’s gesture of obeisance to its Washington masters. And causing the Volt to be built was a gesture by those masters to demonstrate how much they worry about the climate. The climate may not understand the importance of gestures.

Today, Little Sisters of the Poor Home for the Aged v. Sebelius may be the second-most serendipitously named court case in U.S. history, second to Loving v. Virginia (wherein Richard Loving, who was white, and his wife Mildred, who was black, in 1967 overturned Virginia’s law against interracial marriages). The Little Sisters are challenging the Obamacare mandate that makes them complicit in providing, through their health insurance, contraception, something that offends their faith.

This mandate illustrates Gesture Liberalism: It is unimportant to the structure of Obamacare. It has nothing to do with real insurance, which protects against unexpected developments — car insurance does not pay for oil changes. The mandate covers a minor expense: Target sells a month of birth control pills for $9 . The mandate is, however, a gesture affirming liberalism’s belief that any institution of civil society can be properly broken to the saddle of the state.

The next item on Gesture Liberalism’s agenda is to raise the minimum wage for the 23rd time. Less than 3 percent of the workforce earns the minimum; more than 60 percent of those who do earn it get a raise within a year; more than half of minimum-wage earners are students or other part-time workers from households with average incomes of $53,000. Never mind. Raising the minimum is a gesture of devotion to “equality.”

As is Obama’s support for universal preschool, the centerpiece of the agenda of New York City’s new mayor, Bill de Blasio. When, in Obama’s first inaugural address, he vowed to “restore science to its rightful place,” he evidently meant to exclude social science: There is much discouraging data about the efficacy of universal preschool.

It will, however, mean billions for hiring more members of teachers unions, whose dues will help elect the likes of Obama and de Blasio. So this component of Gesture Liberalism is more than just a gesture.

The 'Trickle-Down' Lie

The 'Trickle-Down' Lie

By Thomas Sowell - January 7, 2014

New York's new mayor, Bill de Blasio, in his inaugural speech, denounced people "on the far right" who "continue to preach the virtue of trickle-down economics." According to Mayor de Blasio, "They believe that the way to move forward is to give more to the most fortunate, and that somehow the benefits will work their way down to everyone else."

If there is ever a contest for the biggest lie in politics, this one should be a top contender.

It should win the contest both because of its purity -- no contaminating speck of truth -- and because of how many people have repeated it over the years, without any evidence being asked for or given.While there have been all too many lies told in politics, most have some little tiny fraction of truth in them, to make them seem plausible. But the "trickle-down" lie is 100 percent lie.

Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this "trickle-down" theory. Some readers said that somebody said that somebody else had advocated a "trickle-down" policy. But they could never name that somebody else and quote them.

Mayor de Blasio is by no means the first politician to denounce this non-existent theory. Back in 2008, presidential candidate Barack Obama attacked what he called "an economic philosophy" which "says we should give more and more to those with the most and hope that prosperity trickles down to everyone else."

Let's do something completely unexpected: Let's stop and think. Why would anyone advocate that we "give" something to A in hopes that it would trickle down to B? Why in the world would any sane person not give it to B and cut out the middleman? But all this is moot, because there was no trickle-down theory about giving something to anybody in the first place.

The "trickle-down" theory cannot be found in even the most voluminous scholarly studies of economic theories -- including J.A. Schumpeter's monumental "History of Economic Analysis," more than a thousand pages long and printed in very small type.

It is not just in politics that the non-existent "trickle-down" theory is found. It has been attacked in the New York Times, in the Washington Post and by professors at prestigious American universities -- and even as far away as India. Yet none of those who denounce a "trickle-down" theory can quote anybody who actually advocated it.

The book "Winner-Take-All Politics" refers to "the 'trickle-down' scenario that advocates of helping the have-it-alls with tax cuts and other goodies constantly trot out." But no one who actually trotted out any such scenario was cited, much less quoted.

One of the things that provoke the left into bringing out the "trickle-down" bogeyman is any suggestion that there are limits to how high they can push tax rates on people with high incomes, without causing repercussions that hurt the economy as a whole.

But, contrary to Mayor de Blasio, this is not a view confined to people on the "far right." Such liberal icons as Presidents John F. Kennedy and Woodrow Wilson likewise argued that tax rates can be so high that they have an adverse effect on the economy.

In his 1919 address to Congress, Woodrow Wilson warned that, at some point, "high rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils."

In a 1962 address to Congress, John F. Kennedy said, "it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now."

This was not a new idea. John Maynard Keynes said, back in 1933, that "taxation may be so high as to defeat its object," that in the long run, a reduction of the tax rate "will run a better chance, than an increase, of balancing the budget." And Keynes was not on "the far right" either.

The time is long overdue for people to ask themselves why it is necessary for those on the left to make up a lie if what they believe in is true.

Sorry, But "Income Inequality" Is About To Increase

January 02, 2014/ Francis Menton

Yesterday, New Year's Day, new Mayor Bill de Blasio was sworn in on the steps of City Hall.  He gave an inaugural address reiterating all his major campaign themes.  Chief among these was what he calls the "crisis of inequality."

New York has faced fiscal collapse, a crime epidemic, terrorist attacks, and natural disasters. But now, in our time, we face a different crisis – an inequality crisis. . . .  It’s a quiet crisis, but one no less pernicious than those that have come before.  Its urgency is read on the faces of our neighbors and their children, as families struggle to make it against increasingly long odds. To tackle a challenge this daunting, we need a dramatic new approach. . . .   A city that fights injustice and inequality — not just because it honors our values, but because it strengthens our people.

There were no specifics in the speech as to what de Blasio intends to do about the crisis, or why he thinks he can solve it, if indeed it is a problem.

I have a prediction for de Blasio that he might not like:  income inequality, as measured by government statistics,  is going to increase over the next four years, both in New York and in the United States as a whole.  That will occur literally no matter what de Blasio does, no matter how much in the way of taxpayer resources he devotes to the issue.  The reason is that government policies beyond his control, largely at the federal level, have a powerful effect of increasing measured income inequality.  The big three policies driving measured income inequality are food stamps, Medicaid, and Obamacare.  The third has just begun to work its destruction.

President Obama is also all over the income inequality issue.  He gave a big speech on the issue in Kansas on December 4 (where he called income inequality "the defining challenge of our time"), and the smart money is betting that this will also be the big theme of his upcoming State of the Union address.  And of course government benefits for low income people have exploded during Obama's five years in office.  So has measured income inequality increased or decreased on Obama's watch?  The answer is that it has increased.  Not only has it increased, but it has increased faster than it increased during the eight years of GW Bush.  Among many articles discussing this seeming anomaly, here is one from the Huffington Post of September 1, 2013.  An excerpt:

The difference between America’s median and average wages grew at a rate of 0.28 percent under President Bush, while it’s grown at a rate of 1.14 percent -- or about four times that -- under Obama, according to The New York Times. The median wage is the midpoint of all workers’ wages, so it only ticks up when everyone is earning more. While a small group of people earning higher pay can push the average wage up.  So, as the difference between the two rises, it means that those at the bottom of the income scale are making fewer gains compared to those at the top.  This data point is one of many that illustrates that in Obama’s America the rich are gaining while the rest of us are struggling to get by.

How could this possibly be?  The answer is that increases in government benefit programs are actually the main cause of the increase in measured income inequality.  This happens because the government benefit programs have the effect of suppressing the measured income of the lowest tiers of the income distribution.

To understand why, you need to know two things: (1) government in-kind benefit programs do not count at all in the measurement of "income" that then goes into the measurement of "income inequality," and (2) at the bottom tiers of the income distribution, government benefit programs seriously discourage the formation of families with a breadwinner.  And thus we have large numbers of single-parent households, living largely or entirely off government benefits, all of which count as zero income.  No amount of new jobs in the economy, no amount of increases in minimum or average wages, no amount of union organizing, and for that matter no amount of increases in the in-kind government benefits, is going to provide these families with measured income. 

The increase in measured income inequality on Obama's watch corresponds to the explosions in food stamp and Medicaid enrollment during this period.  This is not a coincidence.  Put yourself in the position of a woman who has had a couple of children at a young age without marrying and has been able to make a go of it with a suite of government benefits, including housing, food stamps, and free medical care.  All of those things count at zero in the income statistics.  Now a hard-working young man comes along, interested in being with you, and he has a lower- to middle-class income, say $30,000 to $40,000 per year.  You would be out of your mind to marry this man.  Instantly you are disqualified from all the benefits (or in the case of the housing, your rent shoots up).  And why, when you can hang out with the guy four or five or six days a week, you keep the apartment and the food stamps and the Medicaid and he keeps the money (and maybe gives you some of it on the side)?  Ninety-nine percent of people facing this situation are going to make the same choice.  As more people get the benefits (the number on food stamps has increased by about 20 million since Obama took office), more will make the decision to perpetuate an income-free family unit to keep the benefits flowing. 

Meanwhile, at the higher reaches of the income distribution, income continues a slow but steady rise.  The effect of that, combined with government-caused stagnation at near zero levels at the bottom, is steady increases in measured income inequality.  

Suppose now that the government substantially increases all the benefits that it provides to the poor.  This has absolutely no effect on measured income inequality, since none of the benefits count in the statistics.

And into this mix, now throw Obamacare.  Beginning basically today,  Obamacare offers very substantial subsidies on medical care premiums to households depending on where their income stands relative to "federal poverty level" (FPL).  Subsidies continue all the way up to 400% of FPL, which for a family of four now approaches $100,000.  Here is a basic summary of the workings from Kaiser Health News.   To put it in simple terms, lots and lots more people are going to find it to their major economic advantage to not be married, which will in turn mean that there will be lots and lots more low and zero income households that previously would have been combined with other households to make middle income families.

So starting now, a young lady just getting started with a low income from freelancing and a little waitressing goes to healthcare.gov to look for a plan, and they ask her her household income.  Does she include the live-in boyfriend's income or not?  That could easily be a $5000 or $10,000 per year issue.  I'm guessing that maybe 97.23% opt for not including him.  OK, if she's really conscientious about honesty maybe he has to go and stay with his parents one or two nights a week.

There is no question but that Obamacare is going to have a large effect on increasing measured income inequality.  Sorry, Bill, but there is nothing you can do about this.  The good news is that little or none of it is real; it's just an artifact of the statistics.  But of course, de Blasio doesn't know that, or at least he hasn't shown any awareness of these issues in anything he has said to date.

Obama the oblivious

Obama the oblivious

 By Charles Krauthammer

In explaining the disastrous rollout of Obamacare, President Obama told Chris Matthews he had discovered that “we have these big agencies, some of which are outdated, some of which are not designed properly.”

An interesting discovery to make after having consigned the vast universe of American medicine, one-sixth of the U.S. economy, to the tender mercies of the agency bureaucrats at the Department of Health and Human Services and the Internal Revenue Service.

Most people become aware of the hopeless inefficiency of sclerotic government by, oh, age 17 at the department of motor vehicles. Obama’s late discovery is especially remarkable considering that he built his entire political philosophy on the rock of Big Government, on the fervent belief in the state as the very engine of collective action and the ultimate source of national greatness. (Indeed, of individual success as well, as in “If you’ve got a business — you didn’t build that. Somebody else made that happen.”)

This blinding revelation of the ponderous incompetence of bureaucratic government came just a few weeks after Obama confessed that “what we’re also discovering is that insurance is complicated to buy.” Another light bulb goes off, this one three years after passing a law designed to force millions of Americans to shop for new health plans via the maze of untried, untested, insecure, unreliable online “exchanges.”

This discovery joins a long list that includes Obama’s rueful admission that there really are no shovel-ready jobs. That one came after having passed his monstrous $830 billion stimulus on the argument that the weakened economy would be “jump-started” by a massive infusion of shovel-ready jobs. Now known to be fictional.

Barack Obama is not just late to discover the most elementary workings of government. With alarming regularity, he professes obliviousness to the workings of his own government. He claims, for example, to have known nothing about the IRS targeting scandal, the AP phone records scandal, the NSA tapping of Angela Merkel. And had not a clue that the centerpiece of his signature legislative achievement — the online Obamacare exchange, three years in the making — would fail catastrophically upon launch. Or that Obamacare would cause millions of Americans to lose their private health plans.

Hence the odd spectacle of a president expressing surprise and disappointment in the federal government — as if he’s not the one running it. Hence the repeated no-one-is-more-upset-than-me posture upon deploring the nonfunctioning Web site, the IRS outrage, the AP intrusions and any number of scandals from which Obama tries to create safe distance by posing as an observer. He gives the impression of a man on a West Wing tour trying out the desk in the Oval Office, only to be told that he is president of the United States.

The paradox of this presidency is that this most passive bystander president is at the same time the most ideologically ambitious in decades. The sweep and scope of his health-care legislation alone are unprecedented. He’s spent billions of tax money attempting to create, by fiat and ex nihilo, a new green economy. His (failed) cap-and-trade bill would have given him regulatory control of the energy economy. He wants universal preschool and has just announced his unwavering commitment to slaying the dragon of economic inequality, which, like the poor, has always been with us.

Obama’s discovery that government bureaucracies don’t do things very well creates a breathtaking disconnect between his transformative ambitions and his detachment from the job itself. How does his Olympian vision coexist with the lassitude of his actual governance, a passivity that verges on absenteeism?

What bridges that gap is rhetoric. Barack Obama is a master rhetorician. It’s allowed him to move crowds, rise inexorably and twice win the most glittering prize of all. Rhetoric has changed his reality. For Obama, it can change the country’s. Hope and change, after all, is a rhetorical device. Of the kind Obama has always imagined can move mountains.

That’s why his reaction to the Obamacare Web site’s crash-on-takeoff is so telling. His remedy? A cross-country campaign-style speaking tour. As if rhetoric could repeal that reality.

Managing, governing, negotiating, cajoling, crafting legislation, forging compromise. For these — this stuff of governance — Obama has shown little aptitude and even less interest. Perhaps, as Valerie Jarrett has suggested, he is simply too easily bored to invest his greatness in such mundanity.

“I don’t write code,” said Obama in reaction to the Web site crash. Nor is he expected to. He is, however, expected to run an administration that can.

Reid exempts staff from ObamaCare

Amazing.  I don't usually post articles calling out specific individuals, but this is just too ridiculous not to publicize...


Reid exempts some staff from having to buy insurance on ObamaCare exchange
Published December 04, 2013
FoxNews.com

Senate Majority Leader Harry Reid is allowing some staffers to keep their health insurance instead of making them buy it through an ObamaCare exchange, although he was one of the strongest Capitol Hill supporters of the 2010 law.

The Nevada Democrat is exercising his discretion under the president’s signature law to designate which staffers can keep their federal insurance plan and which must now purchase a policy through the District of Columbia’s health-care exchange.

However, he purportedly is the only top congressional leader to exercise that option, which resulted in sharp criticism Wednesday from Texas Republican Sen. Ted Cruz, perhaps the staunchest ObamaCare opponent on the Hill.

"Sen. Reid's decision to exempt his staff … is the clearest example yet of ObamaCare's failures and Washington hypocrisy,” he said. “His staff worked to pass it and continue to promote it, now they don't want to be part of it because it's a disaster.”

The distinction is between personnel staff, forced onto the exchange, and leadership and committee staff, who are allowed to keep their federal plan.

However, drawing a distinction is difficult because some duties overlap, a Reid staffer told Fox News.

The staffer could not give a breakdown. But Reid is going on the exchange and says he is happy with its options.

An amendment to ObamaCare by Iowa Republican Sen. Chuck Grassley forced staffers onto the exchanges, but additional changes allow for some flexibility. Still, the final rules, put forth by the Office of Personnel Management, leave some discretion with the lawmaker.

“The only fair path forward is to repeal ObamaCare, in its entirety, for everyone," Cruz added.