American Elephants

What Is The Proper Size of Government? by The Elephant's Child

Politicians keep debating the size of government. Republicans believe that government tries to do way too much, and that government is not very good at the things it does try to do. Democrats are inclined to believe that government needs to do more to alleviate the problems of society.

The recovery from “the Great Recession” has been sluggish at best, and way too many people have left the labor force. To encourage growth, the Obama administration relies on government action: the latest is manufacturing hubs, and it has been infrastructure projects,  crumbling roads and bridges, wind farms and solar arrays, job training programs, and they have all done little to change the unemployment rate, or significantly increase the labor force. But the belief in government action to change and improve society remains firm.

Over the years, economists have measured the effect of the size of government on economic growth and social outcomes like life expectancy, infant mortality, homicide rates, educational attainment and student reading proficiency. One recent addition to the studies of the result of government size comes from a study published by Canada’s Fraser Institute, entitled “Measuring Government in the 21st Century” by Canadian economist and university professor Livio Di Matteo.

Di Mateo’s analysis confirms a large body of empirical research examining the relationship between the size of government and economic outcomes. Canada’s recent retrenchment is an example of a country shrinking government without a trade-off in economic and social outcomes.

When governments focus their spending on basic, needed services like the protection of property. His findings also demonstrate that there is a tipping point at which more government actually hinders economic growth and fails to contribute to social progress in any meaningful way. Di Mateo examines international data and finds that, after controlling for disparate factors, annual per capita GDP growth rates start to decline when government spending consumes 26 percent of the economy.  Economic growth rates start to decline when government spending exceeds this level. Government spending becomes unproductive when it goes to things like corporate subsides, overly generous wages, overly generous benefits for government employees, and crony capitalism.

According to data from the OECD, the size of government in the United States was approximately 40 percent of GDP in 2012, Which suggests that a smaller size of government than we currently have would translate into higher annual economic growth.


It Takes Elephants of All Persuasions, United. by The Elephant's Child


[American Elephant adds: While I wrote the paragraph quoted from our "About" page, I did not write this post and do not agree with the insulting characterization of the Tea Party.]

If you have ever clicked on the “ABOUT” line in the sidebar, it says :

American Elephants is the internet home of big-tent conservatism — black, white, brown, gay, straight, Christian, Jew or Hindu — it takes elephants of all persuasions, united, to beat back the liberal clowns and lead the circus of politics. So, ladies and gentlemen! Children of all ages! Step right up and come on in under the Big Top!

I have no story about my magical conversion from a  youthful romance with the Democratic party, I have always been a Republican. In fact, I’m a 4th generation Republican, one of my great-grandfathers wrote around 1860 that he “was a quiet but interested member of the Republican Party.”

“Republican” is a term in current disfavor, Liberals have gone to great lengths to call us racist, bigots, mean, uncaring, racists, and now “conservative” is the preferred term. My party registration remains the same. The “Big Tent” part has lapsed into disfavor among many Republicans as the Tea Party people are furious with the Republicans in Congress because they haven’t taken down the Democrats, impeached the president, and denied funding to ObamaCare. Business interests are furious with the Tea Party because of their encouragement for shutting down the government, and opposition to increased immigration.  Libertarians keep complaining about the regulatory state, and want more conversation about liberty — personal and economic. Republicans disagree about a lot of things, but they also agree about most of the really important ones.

Democrats apparently agree about everything, They even agree in exactly the same words, so one must assume that “the words” are passed down from a particular source, probably the Center for American Progress, the home of those who now want to be called ‘progressives’ instead of ‘liberals’ because ‘liberal’ has become somewhat out-of-favor word. Since they are well-informed by the left-wing media, they scrupulously avoid anything that might question their certainties, which makes it hard to find ways to compromise with opponents.

There is a lot on which Republicans agree. Free markets, free people, respect for the Constitution, support for the military, small government, avoiding over-regulation, low taxes, balanced budgets, fiscal conservatism — a very partial list. But some are neglecting what is meant by a big tent. The Founding Fathers put together a government where the process was meant to be slow so that all sides could be heard and disagreements fully aired. Individuals have their own opinions. Expecting everyone else to agree, or attempting to drum out of the party those who do not agree is a recipe for disaster. Concentrate on the areas of agreement, and support those who agree most of the time.

I agree with the Tea Party. I think the Obama administration is the most incompetent and corrupt administration that we have ever had. I agree with the Libertarians that big government and the administrative state are way out of control, and that Americans are perfectly capable of managing their own affairs without government interference. I agree with business that over-regulation and uncertainty are devastating to business; and if we want a recovery we need to remove the barriers we put in the way of business. There is no reason in the world why America should have the world’s highest corporate tax. Corporations don’t pay taxes, they pass them through to consumers in the price of their goods. No candidate is going to be perfect. We are human, a quarrelsome, flawed species, and we are not going to agree on everything. Don’t expect perfection. If we are going to win, we need everybody in the big tent.


Upward Mobility is Alive and Well by The Elephant's Child


The upward path of income mobility is not always smooth, and not always easy, but for anyone who is determined, it has changed little in the last 50 years. You may get lots of help or have to do it all on your own, but the path is there and open. Freedom is the key.

This year Lyndon Baines Johnson’s “War on Poverty” is fifty years old, and a failure. Unlike today’s Democrats, Johnson was quite explicit on what he intended. The purpose of the “war on poverty” was to make “taxpayers out of taxeaters,” and the slogan was “Give a hand up, not a handout.” He declared “The days of the dole in our country are numbered.” 50 years and trillions of dollars later, there is more dependency than ever. Ironically, dependence on government had been declining since 1960 and was only half of what it had been in 1950. It started up again with the War on Poverty.

In the State of the Union address on Tuesday, President Obama is expected to make income inequality— as measured by the Census Bureau— the centerpiece of his speech. He is unlikely to mention that income inequality has increased more on his watch than it did under any of the three previous presidents. The policies that he is pushing have provided few benefits to those they are supposed to help. Redistribution, raising taxes on the rich would seem like it would help, but Clinton raised taxes and inequality went up. Bush cut taxes and inequality was unchanged during his term in office.

Raising the minimum wage is popular with those who believe that the minimum wage is just not enough to support a family — but that’s not what the minimum wage is supposed to do. It is supposed to be a beginner wage where inexperienced people can learn how to work. It is often called an Unemployment Act for young people — who are usually the ones who get minimum wage jobs. It does not reduce inequality. The minimum wage climbed 21% under Clinton, and inequality also climbed. The unemployment rate among black youth is a disgraceful  60%.

WebObama0127.gif.cms  Obama has proposed setting up “Promise Zones” in economically distressed areas that will get federal help and some tax breaks. This is not new, but a variation on the enterprise zone program which had no effect on job or business creation. Obama’s favorite is college aid, but federal aid has exploded in recent years, and encourages increases in tuition. Business wants more immigration, but increased numbers are not good for those struggling at the bottom. The CBO found that the Senate immigration bill would depress the overall average wage for the first ten years.

If there is one thing that most defines the Obama administration, it is the push for control. New regulations are pictured by the large stacks of paper that represent new pages in the Federal Register. The most obvious difference between Democrats and Republicans is the degree of control imposed on ordinary Americans. Republicans believe firmly in free people and free markets. They assume that ordinary people are mostly perfectly capable of managing their own affairs.

Democrats believe that people need to be managed. It’s more that they believe that the wise people who work in government are much more capable of doing the right thing, and telling others what to do.  Ordinary people cling to their bibles and guns (yes he actually said that), and need regulating. It can be called the totalitarian impulse. It begins with banning Big Gulp drinks, banning trans-fats, banning incandescent lightbulbs, and extends to managing your health care, your communication, and soon to extend to managing the energy you use. Progressives believe that the world can be improved if they just control every aspect of  your life. It’s not meant to be really noticeable. A ban on plastic bags here, a fee to visit a park, you cannot see your usual doctor — he’s not on the list, The little annoyances mount up until one day you wake up and realize just how intrusive the government has become.

Upward mobility is still there. The one thing you need to remember when presented with scary statistics about unemployment, inequality or economic mobility is that these are not the same people over time.

“Income inequality” sounds bad, but how do you make people equal? And is that a good thing? I don’t think so. The control freaks in government decided that we should not have electricity produced by coal-fired power plants. That has added thousands of people to the unemployment rolls. The government has invested millions in favored businesses like solar panels and wind farms, and the few that have not faced bankruptcy have only raised the cost of our energy. Government efforts to pick winners and losers result in failure.  The American people are perfectly capable of managing their own affairs without government help. If the government would just stop “helping”, things might turn around.

Another Vote for Economic Growth! by The Elephant's Child

Randal Stephenson is chairman and CEO of AT&T Inc, and the new chairman of the Business Roundtable, an association of chief executive officers of leading U.S. companies. He wrote, in the Wall Street Journal today:

No matter the topic, the debate in Washington often comes down to whether we need more government funding for social programs or less spending to reduce the debt we leave our children. But this win-lose framing completely misses the one thing required to achieve both objectives: robust economic growth.

The simple fact is that if we want to control the deficit, preserve key entitlement programs, educate our children, grow jobs, and offer upward economic mobility for everyone, we have to get our economy growing faster.

To that end, the Business Roundtable, whose member companies generate annual revenues of more than $7 trillion while employing 16 million workers, is embracing an agenda for 2014 centered on one thing—encouraging public policies that will return the U.S. to its full growth potential.

We need four basic elements, he says:  Fiscal stability. Stop stumbling from one fiscal crisis to another. Uncertainty. Nobody can plan. Will U.S. default on its debt? Interest rates? Budget deal is a step in the right direction. Other three elements are 1) Tax reform. 2) Expanded trade. 3) Immigration reform.

A study in American Economic Review shows that a one-percentage point decrease in the average corporate tax rate would result in an increase in real U.S. GDP of between 0.4% — 0.6% within one year.

Today, one our of every five U.S. jobs is supported by international trade. NAFTA has been a dramatic success in our hemisphere.

They support immigration reform with a larger pool of visas for high-skilled workers, and new visa system for lower-skilled workers. I’ll go for that when a goodly percentage of the 91 million workers who have dropped out of the labor participation force. find work. These are people in the working age group, not retired or disabled, but simply working age people who have given up. They do not count as “unemployed” and receive no unemployment compensation.

The “shortage” of people trained in science, technology, engineering and math is largely a myth, and there are far more graduates than openings. I have read that business is reluctant to hire people who have been out of work for some time, on the assumption that if they were qualified they would not be unemployed. This may be true.

Business has little idea how to sort through job applicants, and high-tech companies have devised all sorts of elaborate tests to try to sort out those who will fit in. Anyone who has worked in business has met people who make you wonder how they possibly got hired. Unfortunately they sometimes occupy important positions, but that is true of any large organization, the larger, the worse the problem.

Economic growth is the remedy for poverty, inequality and unemployment. Growth fosters innovation and creativity, and the fuel for economic growth is freedom. Countries that pursue economic freedom get prosperity as a bonus.

According to the 2014 Index of Economic Freedom, just released by the Heritage Foundation and the Wall Street Journal, after seven straight years of decline, the U.S. has dropped out of the top 10 most economically free countries.

Ronald Reagan Explains States’ Rights by The Elephant's Child

It is easier to change regulations imposed by a community, a county, or a state than it is to deal with the federal leviathan. Not that it always works, but it is easier to see the results of regulations locally.  And if the imposition of regulation is too dire, you can pick up and move to another state where the market and the people are more free.

The free enterprise system is the on-ramp to economic progress and rising incomes. A Heritage Foundation study on economic progress around the globe finds clear and compelling evidence that the poor are always and everywhere better off in those countries that are economically free countries than in nations that are not free. If we judge society by how well it serves the poor, then free enterprise is far and away the greatest anti-poverty program known to man.   (Stephen Moore: Who’s The Fairest of Them All )

Daniel Hannan on the Anglo Saxon Tradition by The Elephant's Child

In “Inventing Freedom”, Daniel Hannan reflects on the historical origin and spread of the principles that have made America great, and their role in creating a sphere of economic and political liberty that is as crucial as it is imperiled. Hannan argues that the ideas and institutions we consider essential to maintaining and preserving our freedoms — individual rights, private property, the rule of law, and the institutions of representative government — are the legacy of a very specific tradition that was born in England and that we Americans, along with other former British colonies, inherited.


What’s the Real Difference Between Republicans and Democerats? by The Elephant's Child

What is the difference between Republicans and Democrats?  I suspect that most people don’t really know. Republicans  are usually pretty clear about what we believe, and can express it clearly — that’s why we argue so much. It’s a big-tent party that welcomes Conservatives, Tea Party people, Libertarians, “mainstream” Republicans, Independents, and all sorts of people who are deeply interested in a single issue. Republicans don’t usually conform to current talking points as Democrats do.

Republicans are committed to principles, Democrats admit that they don’t have any, and react to events as they occur, which they believe is a superior way of thinking.

Republicans worry about debt and taxes, economic growth, and individual liberty. Democrats’ care about winning. When they win, they have the power to tax and spend which will enable them to win the next time.

Republicans believe in low taxes, because the money belongs to individuals who, on the whole will use it far better than the government would. Free people and free-market capitalism. The decisions of the mass market will usually be far better than the decisions of the enlightened few.

Democrats believe in government money. It is money they are entitled to spend because of taxes which are paid by rich people who don’t deserve it. (At some point you have enough money). When they leave government “service” they will move to lobbying or NGO’s or corporate boards, or other well remunerated positions. It’s a good life.

Harry Reid, Nancy Pelosi, Steny Hoyer, Charles Schumer and Max Baucus have never done anything but government. No private sector experience at all. I haven’t had time to go through the rest of the list, but I would expect a lot more of the same. So they do not understand profit and loss, nor risk, nor meeting a payroll— any of that stuff. They seem a little weak in the math department as well. And economics? Any bets?

So these are the people who believed they could write a successful health insurance program for 330 million people to replace the world’s finest health care system. They believed they could convince ordinary Americans that it will cost less and be a vast improvement over what they had. They knew perfectly well that it would take some convincing. We got a lot of convincing, direct from the President and all his minions.

And there is not any part of it that can be believed. They tell you that they care about you, but unfortunately — they lie.

Uncommon Knowledge: Economist John B. Taylor by The Elephant's Child

High unemployment. Business in the doldrums, the recovery that Obama keeps promising remains elusive, in spite of his claims. Many small businesses that are the usual engine of growth are struggling. The elephant remarked yesterday that the only business that seems to be visibly expanding is the gun range.

The business organizations, the Chamber of Commerce and Small Business Association and others readily say that uncertainty is holding them back. To open and run a business is a risk. There are all sorts of uncertainties that affect your bottom line. Nobody knows what will happen tomorrow. The actions of this administration have been to increase uncertainty across the board. Will taxes go up? Are energy costs going to rise and by how much? What new regulations are going to be issued? Have I broken any regulation that I don’t even know about that will have an armed swat team breaking in my front door? What crazy new environmental regulation is the EPA going to come out with tomorrow? John Taylor explains.


Seems Like Common Sense to Me by The Elephant's Child

Democrats will not consider reform of entitlements. They have achieved what success they have found by being the party of handouts. Everywhere, it is entitlements of one sort or another that are destroying economies. California cities are going bankrupt right and left, largely because of entitlements — overly generous pensions promised, and overly generous pay packages that they can no longer afford. The state of Michigan is about to dump Detroit’s city government and install a manager with the power to try to rescue the city.

At the federal level, Social Security, Medicare and Medicaid are all destined to go broke sooner, rather than later, but Democrats will not consider reform. All three programs are rife with fraud and waste. Vastly increased life-expectancy has played hob with the original assumptions behind these programs, and on the other end is a birth-dearth which leaves more older people to be supported by ever smaller numbers of working people. Throw the retiring baby boom into the mix, and all three programs are in deep, deep trouble.

Democrats have long-expected to be reelected by claiming that Republicans want to take away your Social Security, deprive you of care in your old age (“Throw granny off the cliff”), and to take away all the benefits that Democrats have promised. If they cannot depend on scare tactics, what do they have to offer?

With increased life-expectancy, people should be able to accept a gradual increase in the retirement age. Working one more year before retirement shouldn’t be that big a problem. Many people don’t want to quit working anyway. Those who are not required to retire at 65 often choose to work for many more years.

One must assume that Democrats are just naturally bad at math, or math avoiders, or unfamiliar with cost-benefit analysis, or their thought processes naturally turn only to emotional content. What is the matter with these people? Do they just assume that these programs are destined to always survive? Or like Scarlett O’Hara— they’ll think about that tomorrow?

In the years since the end of World War II, from 1945–2008, the number of jobs grew in 86% of the months, or 640 out of 744. The Reagan recovery produced job growth in 81 out of 82 months — twenty million new jobs in the first seven years alone, increasing the federal work force by 20%. That grew into eight million new jobs after 2003 — with capital gains and dividend tax rate cuts. History.

Some states and cities are learning that they can no longer afford the generous promises they have made. The federal government is approaching that tipping-point.

President Obama believes that consumer “demand” drives economic growth and prosperity. If he just puts money into people’s pockets, consumers will quickly spend the money and the economy will recover. That was the flawed notion behind the cut in payroll taxes. Didn’t work. Observing hard times and uncertainty about jobs, people saved the extra money in their paychecks, and cut back on spending as well.

The benefits provided by government largess are never enough for a comfortable life. Food stamps (without cheating) don’t provide gourmet meals. Social Security alone is not enough to retire on. Welfare doesn’t move you up in the world. The more government largess is distributed, the fewer people there are to support that largess. It is inevitably a downward spiral for everyone. When the government provides a bad example of crony-capitalism or dishonesty, soon more people follow the example set.

Government doesn’t have any money of its own. It only acquires funds by taxing the people. The more government grows, the more revenue it needs; the more revenue they get by taxing the people, the more the economy declines and the fewer working people there are to pay taxes. Why is that so damned hard to understand?


Is Free Market Capitalism Morally Superior? Of Course! by The Elephant's Child

Economist Walter Williams has a special genius for explaining complicated things in simple terms. He is a renowned Professor of Economics at George Mason University, and in this interview he takes on the free market. Good video to share with your high school and college students.

Only in America: That’s What It’s All About. by The Elephant's Child

With These Hands by The Elephant's Child


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