American Elephants


Class Warfare, Self-Reliance, Envy and The Benefits of Income Inequality by The Elephant's Child

President Obama’s suggestion that if he loses the 2012 election “it might herald a painful era of self-reliance in America,” is still bothering me.  Self-reliant people are those we call — adults. And how interesting that he would come up with that as he praises the Occupy people, proposes to reduce the payments on student loans (by an impressive $10 a month), and in every way suggests that Americans are children who must be cared for.

This is why Liberals promote class war. Hate and envy for “the rich;” the Occupy people separate themselves into the 99% and the 1%.  The 1% are the rich — who deprive the 99% rest of the country — of what? Their money? Their possessions? Their influence?

Well, excuse me. I don’t care to be grouped in any 99% with the economically illiterate freeloaders drumming and chanting in squalor.  They do not represent 99% of anything. There are around 330 million people in the United States.  If you had an Occupy protest in two cities in each state, you would have to have 33,000 deadbeat occupiers at each protest to equal 1% of the 330 million people in the country.  They are just the other not quite 1%.  They have an exaggerated idea of their own importance, but tourists do come to look at the squalor.

Their motivating ideas seem to be their own student loans, or their unemployed state, or just general lethargy. In general the motivation seems to be the idea of increasing inequality. Since the poor cannot get poorer (though this is probably false, since we have very affluent poor, as demonstrated by their iPads and iPods and laptops) if the gap between rich and poor grows, then it’s no fair— the rich must be getting richer. In this recession, the rich aren’t as rich as they used to be either.

The whole thing, however, assumes that equality would be a good thing. Why would anyone assume that? Is it unfair if the fellow who worked long hours all his life to get an advanced education, build a business, and make it grow becomes richer than the deadbeat who dropped out of high school, dabbled in drugs and petty crime and never held a job for long?

Liberals have long focused on inequality and the unfairness of it all.  They cannot get their minds around the idea that inequality might possibly be a good thing.

I am a great admirer of Richard Epstein, Professor of Law, Scholar at the Hoover Institution.  He was invited as a contrarian speaker to the PBS News Hour’s series on “Inequality in America”, making sense of economic news.  This is not a video I can embed here, but here is the link. Professor Epstein is wonderful to listen to, explains clearly why economic inequality is a good thing.  It is a marvelous video, and great fun to watch the PBS host’s head explode. (They must wish they never invited him). Poor interviewer Paul Solman is flummoxed, incredulous, unbelieving!  How would anyone say such things!  But, but.. It’s great fun, and you may want to watch it several times to catch all of Epstein’s ideas.  PBS probably never heard such ideas before.



More College Graduates Aren’t Necessarily a Good Thing. by The Elephant's Child


President Obama stopped in at the University of Colorado on his Wednesday campaign swing, to urge thousands of college students to make their voices heard:

Young people, I need you guys involved. I need you active, I need you communicating to Congress, I need you to get the word out. Tweet `em. They’re all tweeting all over the place, you tweet `em back.

“The president took off his jacket and rolled up his sleeves on the last stop on a 3-day fundraising swing through the West that mixed high-dollar fundraising with new announcements of modest executive actions to circumvent Congress,” reported the AP.

We can’t wait for Congress to do its job, so where they won’t act, I will. I am going to do everything in my power to make a difference for the American people, but Denver, I need your help.

So to get the help of young people, Obama plans to have taxpayers pay for student loans.  He has a lot of opportunity in this area because he early on had the federal government take over the student lending business in America.  He claimed the measure would be a cost-savings measure, saying that the old system of privately-issued, government guaranteed loans reduced the amount of money available for needy students and prevented the feds from making the system more efficient.

Now he is using that new power to obtain a taxpayer-financed stimulus that Congress would not approve.  The idea is to cap student loan rates at 10 percent of a debtor’s income that is above the poverty line, then limiting the life of the loan to 20 years.

So assume that Jerusha Jones gets into Old Ivy University and borrows, in a government loan, the$200,000 she needs to get an undergraduate degree in women’s studies.  Her repayment schedule will be based on her earnings.  If she opts for public service and takes a job as a city social worker earning $25,000, her payments will be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total.  After twenty years at that rate, taxpayers would get back just $28,220 of their $212,000 loan to Jerusha. [Example shamelessly borrowed from Chris Stirewalt because he already did the math.]

Student debtors will be able to refinance and consolidate their loans on more favorable terms, so they pay less.  You can see how this is a major cost-saving measure, for the students at least.Though according to a report on the radio news, student debts from years previous to Obama’s term in office would not be eligible .

This is coming at a time when many economists are warning of a college debt bubble that is distorting the entire picture. Cheap credit on easy terms increases the amount of money chasing the diploma, allowing schools to further increase prices — which have been hugely outpacing inflation for years. Tuition and fees at public four-year colleges and universities jumped 8.3 percent this year. Private, non-profit colleges raised tuition and fees 4.5 percent — still twice the rate of inflation.

So Obama can run up the national debt with a stimulus that Congress would not pass, and buy the votes of gullible college students. He plans the same trick with underwater mortgages — raising the debt by executive order to lower homeowner’s mortgage payments.

Government interference has enabled colleges and universities to raise their rates to ridiculous levels. And of course each institution raises their rates in line with everybody else. Did you never wonder why there isn’t a splendid example of someone holding down costs? Schools have added administrative staff, built new facilities, landscaped, added climbing gyms, theaters, and elaborate labs. Also grade inflation, fun classes, silly studies, and graduates that can’t read well, write clearly, or have any understanding of history.   Go figure.




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