American Elephants

Obama Is in Full Campaign Mode. You Can’t Believe Him Anymore Now Than You Could The Last Time. by The Elephant's Child

On Sunday, 60–Minutes’ Steve Kroft interviewed President Obama on a wide range of topics, including Obama’s performance in office, the U.S. economy, unemployment, congressional gridlock and the mounting deficit.

“After months of listening to attacks from Republican presidential candidates and congressional leaders, President Obama took off the gloves this past week and emerged in full campaign mode. It began with a major speech in the nation’s heartland, with a vigorous defense of his economic policies, directed at the middle class.”

I was under the impression that President Obama had been in full campaign mode for months.  What was all that flying Airforce One all over the country for fundraising speeches, sometimes as many as three a day? Kroft said “I mean you were really talking [in your Kansas speech] about income inequality,which suggests redistribution of wealth.

Obama: Look, the problem is, is that our politics has gotten to the point, where we can’t have an honest conversation about the greatest income inequality since the 1920s. And we can’t have an honest conversation about the irresponsibility that resulted in the worst financial crisis since the Great Depression, without somebody sayin’ that somehow we’re bein’ divisive. No, we’re bein’ honest about what happened and we’ve gotta be honest about how we move forward.

(Have you noticed that when Obama is in campaign mode—just talkin’ to the folks—he drops his ‘g’s all over the place, but doesn’t do it elsewhere? )

Kroft: Why do you think you deserve to be re-elected? What have you accomplished?

Obama: Not only saving this country from a Great Depression. Not only saving the auto industry. But putting in place a system in which we’re gonna start lowering health care costs and you’re never gonna go bankrupt because you get sick or somebody in your family gets sick. Makin’ sure that we have reformed the financial system, so we never again have taxpayer-funded bailouts and the system is more stable and secure.

Ending Don’t Ask, Don’t Tell. Decimating al Qaeda, including Bin Laden being taken off the field. But when it comes to the economy, we’ve got a lot more work to do. And we’re– we’re gonna keep on at it.

(There was one notable exchange:)

Obama: What happened was that [the Republicans] made overtures, where they were willing to raise about $200 billion in exchange for $2 trillion or so worth of cuts of core programs like Medicare that seniors depend on for their security in their golden years.  And what I said to them was a balanced approach means exactly what it says. It means it’s balanced.  What we haven’t seen is any serious movement on the other side.

Steve, the math is the math.  You can’t lower rates and raise revenue., unless you’re getting revenue from someplace else.  Now either it’s comin’ from middle class families or poor families or it’s comin’ from folks like you and me that can afford to pay a little more.

What Obama does not grasp is that the problem is a spending problem.  The government is spending way too much money. He is clinging desperately to his idea that Keynesian economics — putting a few taxpayer dollars into the hands of consumers will create demand— which will cause business to improve and in turn generate more jobs.  Trouble is, it doesn’t work.

The economists who established that were Christina Romer (Obama’s first Chairman of the Council of Economic Advisors) and her husband in a celebrated study of what worked in recessions and what didn’t. (Not sure what happened there). What works, is making it as easy as possible for companies to hire — reducing the corporate tax to a level more equal to the rest of the world, reducing regulations.  Obama remains convinced that the reason for “the worst economy since the Great Depression” is that there weren’t enough regulations controlling business. Business was heavily regulated already , and the financial crisis was caused by the collapse of the housing bubble, not a lack of regulation.

The math may be the math, but Obama’s is incorrect. If you lower rates, you will raise revenue.  If you increase the opportunity for business to make a profit, business profits will improve and you will therefore get more in tax revenue. You won’t raise revenue enough from that, nor would you raise revenue enough from taxing ‘the rich’— even though they are rich, they don’t have enough money to fix the deficit.

I just don’t believe that most people are consumed with class envy. I keep trying to figure out how Bill Gates’ wealth, or Warren Buffett’s wealth, or even someone in the mere multi-millionaire class, has had the slightest negative effect on me. They didn’t take any of my money to become millionaires and billionaires. Well, I take that back, I’ve willingly paid for and enjoyed the benefits of many Microsoft products.  I got my money’s worth. Bill and Melinda Gates are making a huge effort to do good things for the world with their Microsoft wealth, and Warren Buffett admires their efforts so much that he’s adding much of his wealth to the effort. Good for them.

I just can’t think of anything which a millionaire or billionaire has done that affects me negatively in any way.  The idea of wealth as a pie — if Bill and Warren make more money then there is less left for the rest of us — is a myth. And it is the myth on which Obama’s class warfare depends. If millionaires and billionaires make more money, the economy grows to accommodate the increased money.  In other words, he’s counting on fooling people  once again.



Milton Friedman on ‘Redistribution of Wealth’ by The Elephant's Child
December 1, 2011, 8:16 pm
Filed under: Capitalism, Economy, Statism, Taxes | Tags: , ,

One of the most wonderful things about the computer age is that now we have access to the thoughts and words of those who are no longer with us.

Class Warfare: How the Game is Played! by The Elephant's Child

President Obama can’t let go of the executive jet theme.  He must regard an executive jet as a fat cat accessory that will really offend ordinary folk.  The left is deeply invested in “equality” and most of their policies are designed, in theory, to make people more equal — except, of course for those bright, dedicated, incorruptible people in government who will decide — everything.

A corporate jet is meant to get executives to corporate meetings, corporate locations with as little wasted time as possible. Yes, they are expensive.  Corporate executives’ time is expensive. Attacking corporate jets is attacking an important American industry which employs thousands of Americans. Guess who gets hurt? Not the executives, but the people who design, build and sell airplanes, who face layoffs, lost sales, a damaged industry.

The left maintains that inequality in the U.S. has increased dramatically in recent decades.  Since 1979, they claim, only those at the top have seen their income rise significantly.  Thirty-six percent of all after-tax gains went to the most affluent 1% of the population.  Over 20% of those gains went to the top thousandth (0.1%)of the income distribution. Thus, they say, Economic inequality in the U.S. is now greater than at any time since the beginning of the Great Depression.

Why is this important? The poor have not been getting any poorer. Zero remains zero, if the poor earn no income.  The definition of the poor has changed, because the government “poverty line” below which one is “poor” keeps being raised to include more people. So although more people may now be considered “poor” their situation is not getting worse.  We have all sorts of programs to make sure that the poor don’t have to live poor, and statistics show us that they don’t. The poor are not poor because the rich are rich.

More importantly, the poor, over time, are not the same people. Young people, going out on their own for the first time are usually poor, share living quarters and work in beginning jobs. Over time, they move up. The rich also are not the same people over time. You can check that out on Forbes‘ annual list of the richest people in the country and in the world. People move in and out of the list quite regularly.

At the upper end of the income distribution, you have Bill Gates, and Steve Jobs, and many others. Has the definition of “the rich” changed since 1979?  Oh yeah!  Bill Gates and Steve Jobs (and a lot of others) labored in a new industry that went from strange little machines that only geeks were interested in, to putting computers into most homes, offices, schools, stores and laps. They were in the right place at the right time with the right ideas. Some people are lucky and skillful enough to bring all three elements together.

That has happened many times, over and over in history. The fact that some people get rich doesn’t deprive anyone else. They usually create a lot more wealth for others.  There is not a money pie wherein if one person gets a bigger slice— everyone else gets cheated. When growth like that happens, the economy expands. We’ve had oil barons, cattle barons, railroad barons, movie moguls, rock stars, and on and on. There are new things out there waiting to be invented that will make other people rich.  Are we supposed to hate anyone who becomes rich through his own efforts or his own luck?  Why?

Wealth and poverty are the result of choices: hard work, persistence, determination, education and luck. If a young person graduates from high school, waits to get married until after they have graduated from high school, and waits to have a child until after they have married, in general, they will do alright.

A new study from the Pew Research Center trumpets a new wealth gap between Whites, Blacks and Hispanics.  “The median wealth of white households is 20 times the median wealth of black households and 18 times that of Hispanic households.”  Call this playing politics with statistics.  A “median” number is just the number in the middle, not an average.

The collapse of the housing market and the recession took a far greater toll on blacks and Hispanics than on whites. Much of the housing bubble was caused by government policies that encouraged minorities to buy homes that under normal prudent rules of lending, they would not have been able to afford. Most of the wealth of blacks and Hispanics was in their home equity, and they were hit hard.

The study is based on an economic survey distributed by the Census Bureau that compiles data about household wealth by race and ethnicity.  Plummeting home values were the principal cause of the erosion in wealth among all groups, with Hispanics the hardest hit. A disproportionate number of Hispanics were located in California, Florida, Nevada and Arizona, states hardest  hit by the decline in housing values. Blacks and Hispanics have also been harder hit by unemployment numbers in manufacturing and construction.

Expect this study to make political  headlines across the country.  A president who is already anxious to  campaign on class warfare and the race card will not be able to resist.

A growing economy would change the picture.  How do we get a growing economy? Stop wasteful government spending, and remove the regulation and uncertainty that are hamstringing business.

Set them free.

Class Warfare 101: Tax Corporate Jets, Builders Sell Few, Workers Lose Jobs. by The Elephant's Child

President Obama is always ready to play class warfare. It was probably part of his training as a community organizer.  If your goal is “fairness” then how can anything be fair  if some people are richer than others and have more stuff.

Class warfare means you must hate “the rich”  because they have more stuff.  And the stuff to really envy are— corporate jets. You are supposed to assume that corporate jets are just an unneeded luxury that somehow cheats shareholders and workers.  American business would be hiring so many more workers if business executives were traveling coach like the rest of us and spending their valuable time in long lines being patted down by TSA. Corporate planes are a business tool, and the more widespread the business, the more executives have to travel.

The president demonized meetings in Las Vegas a while back, and all sorts of organizations cancelled their meeting plans there.  Business in Las Vegas dropped off sharply, unemployment increased.  Why did businesses cancel meetings there? Who wants to be held up on national television and accused of wasting money, being there to gamble? Being demonized by the president of the United States suggests all sorts of repercussions — lengthy tax audits, new regulations, new laws.  There’s a reason why so many corporations have lobbyists in Washington.

If you remember, back in the late 1980s Congress, in its wisdom, slapped a 10 percent luxury tax on yachts priced at more than $100,000 and on private planes that cost more than $250,000.  Killed the boat builders. Over 100 builders cut their operations, laid off thousands of workers, and the tax had little effect on folks who wanted a yacht.  They just bought their boat in the Bahamas.

Airplane manufacturers are one of America’s largest exporters, and the industry has been affected by the recession as much as the rest of the economy.  It is an industry that employs real workers, and if business stops buying corporate jets, real people get laid off.  Builders have laid off 20,000 workers since 2008, and are down to roughly 120,000 workers.

The general rule is— if you want less  of something,tax it!  If you want more, reduce the taxes.  That seems so simple that you’d think even a Congressman or a president would be able to remember it.

And by the way, the tax loophole for corporate jets was part of Obama’s stimulus bill.

“Social Justice” and Other Silly Ideas. by The Elephant's Child
January 27, 2011, 8:52 pm
Filed under: Capitalism, Economy, Politics, Statism, Taxes | Tags: , ,

Many economic concepts are counter-intuitive.  And that becomes a political problem.  It emerges in every campaign as “class warfare.”

The goal of the far left is “social justice.” They love the phrase, but explaining it is hard.  Things, they are sure, ought to be fair, and it is not fair if some people are rich and some people are poor.  It’s not fair if some people drive Mercedes and others have trouble buying a used car.  It’s not fair if some people live in big houses and others live in slums.  So “social justice” is to be attained by redistribution of income. It means not equality of opportunity, but equality of outcome.

The thing about redistribution of income for the left, is that it is to be accomplished by taking away other people’s money.  Many of those who are most concerned about “social justice” are notorious for their stinginess with their own money. Our current deficit and debt indicate how easy it is to spend other people’s money.

Income mobility in the American economy is one of the wonders of the world. A young person in America, according to Brookings economists Ron Haskins and Isabel Sawhill, needs only to observe 3 basic rules to  have a 75% chance of being in the middle class: 1. Graduate from high school.  2.  Get a job.  3.  Get married and wait until they are 21 before having a baby.

Americans don’t envy the rich, they hope to become rich.  Here in Washington State, which Obama carried with 57% of the vote in 2008, a proposal was on the ballot to add an income tax applicable only to individuals making more than $200,000 a year or families making over $400,000.  65% of the state’s voters opposed the tax. That’s not envy of “the rich.”

In his State of the Union Speech, President Obama felt compelled to raise the class warfare theme. Although he had just agreed to extend the Bush tax-cuts, he wanted to make it clear that he didn’t like it and would be back to raise taxes on the rich. Whether this is conviction or simply a sop to the far left is unknown.But long-range planning is very difficult when the government has a constant threat of higher taxes hanging over business.

Class warfare does not create jobs.  Attacking the rich or the successful does not create jobs. Government has no clue about creating jobs, they have made that quite clear.  They need to get out-of-the-way and let creative, hard-working Americans restore the economy.

Obama, in Permanent Campaign Mode, Plays Politics With Unemployment. by The Elephant's Child

President Obama, once again, tries to play the class-warfare game.  Goodness, even the British have noticed.  Janet Daley, a prominent British columnist, notes Barack Obama’s attempts to push class resentment in support of failing administration policies.  His Saturday radio message was a laughable attempt to (once again) call Republicans “the party of the rich.”

Speaker of the House Nancy Pelosi (D-SF) (estimated wealth $21 million) believes firmly that unemployment benefits create jobs. This loony theory assumes that people receiving unemployment are so destitute that they immediately rush out to spend every bit of their check, and the “multiplier effect,” a feature of the Keynesian economic computer models, make each dollar spent magically worth at least 1½ times as much in the economy, so everyone will start hiring. There are some missed steps in this process which have to do with uncertainty, increased taxes, increased regulation that have businesses sitting on their hands, afraid to do anything.  Another reason why Keynesian economics have largely been discredited.

The Obama campaign claimed that all their donations came from small amounts contributed by thousands of enthusiastic little people, but such was proved not to be the case.  Their campaign funds came from big donations from the unions, and big donations from — um, — rich people.

The Democracy Alliance was founded in early 2005 by very rich Liberals furious that their efforts to elect John Kerry did not succeed.  In April of 2005 seventy millionaires and billionaires met in Phoenix for a secret planning session.  Members of the Democracy Alliance (called “partners”) pay an initial $25,000 fee, and $30,000 in yearly dues.  They must also pledge to give at least $200,000 each year to groups that the Alliance endorses.

What the unemployed need are jobs.  Not government jobs, although Washington D.C. is the only place in the country where they are really hiring, because they are also paid for with taxpayer money or funds borrowed from China.  What will cause businesses to start hiring?  Removing the uncertainty that now has everyone sitting on the sidelines.

Every time a businessman turns around, there are a new set of rules and regulations. New rules on derivatives targeted on Wall Street but the effect of the rules will weigh heavily on farmers who use them to allay the risk that comes from weather or a drop in price on the market.  The bill will also affect small manufacturers, city governments, credit bureaus and home buyers.  How much?  How bad?  Nobody knows.

The healthcare bill’s effect on business is still unknown.  We’re just finding out a little more about the car-company debacle.  The disaster of the oil spill is not ended by the capping of the well, but exacerbated by the misguided moratorium on drilling.  When the government gets around to recognizing what their moratorium is doing, it may be too late, and all the rigs will have departed for friendlier climes.

The Obama administration has no idea how jobs are created.  Almost no one among his advisers and cabinet members has ever worked in the private sector.  Nor will they listen to those who have. Nor are they willing to listen to other approaches. Obama, we are told, is very dogmatic.  He does not change his mind.  I really hope that is not true.

What Do You Do About the Rich? And What Do You Do About the Poor? And What About All Those Folks In Between? by The Elephant's Child
June 16, 2009, 12:34 am
Filed under: Capitalism, Economy, Freedom | Tags: , ,

Economist Daniel Mitchell of the Cato Institute does a wonderful job of explaining economic concepts in an easy to understand way.  Or perhaps you just need what you know instinctively reinforced.  Dr. Mitchell is your man.  He offers you the arguments you need in your next conversation with a Liberal.  Enjoy.

That is a truly amazing tie.

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