American Elephants


Be Grateful for Income Inequality. It’s a Precursor Of The American Dream. by The Elephant's Child

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The United States government spends over a trillion dollars a year that it doesn’t have. To make that number go away, you either have to reduce spending or increase revenue.

Our wealthiest citizens, the top 20% of the economic pie, pay 70% of all taxes. The poorest 20% pay 3/5ths of one percent of all taxes. So we have to raise taxes on the wealthiest citizens to be “fair” or “balanced.”

There is, however, a problem. If you confiscate the entire wealth of the richest citizens — every penny the  Forbes 400 have — it would cover one year’s federal deficit.

Raising tax rates on everyone in the top 2% of the wealthiest citizens would not cover one year’s federal deficit.

Washington borrows $188 million every hour.

I wrote this down a while back, I’m not sure just how long ago, but I can assure you that nothing has improved.  Food for thought.

—  How You, I, and Everyone Got the Top 1 percent All Wrong by Derek Thompson, The Atlantic

—”Greedy’ Rich Actually The Most Generous Among Us” by Kerry Jackson, Investors Business Daily

— Obama orchestrated a massive transfer of wealth to the 1 percent,” by Matthew Gray, New York Post

There is, of course, an answer. Wealth is created by the free market and capitalism. Free people are endlessly inventive, and the hope of improving your financial situation, making a new idea the next big thing, becomes in a free market the opportunity to succeed. Where did Uber come from? Or telephones unconnected to phone lines that are actually tiny computers keeping track of everything and entertaining you as well?

Getting rich or richer, improving your situation, or changing your life is commonplace in America, yet in many parts of the world it is impossible to move beyond the status into which you were born. I cannot understand why the Left cannot think beyond “income inequality.” They are still stuck back in the French revolution railing against the opulence of the King and all his court. “It’s not fair” they whine.

Some people simply want to get rich —  that probably accounts for all the Powerball tickets sold. Some want to accomplish something worthwhile. Some want to move to a better neighborhood. Some want to build something important, others want to discover something new. If you know or are convinced that you can never move beyond where you are — I guess envy is all you have left.



Never Enough, or What’s Wrong With the Welfare State? by The Elephant's Child

one-dollar-bill-largeFrom William Voegeli’s Never Enough:

“The socialist dream of organizing an economy around the purposes of advancing social welfare, as it is governmentally determined and meted out, seems destined to remain an abstraction, irrelevant to the world’s political and economic needs. One strange result of the collapse of socialism, and the absence of any other credible way to avoid relying on markets is that the welfare state is heavily dependent on the health of capitalism. The government cannot disburse wealth that never gets created, and creating the wealth required for modern, prosperous societies without the knowledge conveyed by prices set in markets appears to be impossible.”



Employment and Unemployment for July, 2015. by The Elephant's Child

So the job situation for the month of July remains — dismal. There were 215,000 new jobs in July, a little less than the expected 225,000. 93,770,000 working-age people, 16 and older, aren’t working. This takes us back to 1977 levels of employment, and we are a bigger country now. This is a 36-year low. A record 56,209,000 women are not in the work force.

Since 2007, 1.4 million manufacturing jobs have been lost. There are 1.4 million new waiter and bartender jobs that have been created in the same time period.

Possibly a more interesting discussion for the debates? How are you going to fix this one?

Unemployment



The Amazing Success of Africa. Botswana Is the Fastest Growing Country in the World. by The Elephant's Child

Leon Louw is an author, policy analyst, and executive director of the South Africa-based think tank: The Free Market Foundation. “Thank goodness people are ‘exploiting ” Africa by buying things from it, by investing in it, by employing people in it,” he said. “The worst thing that would happen is if people decide to stop exploiting Africa.”

The statement might sound provocative, but Louw is responding to a a pair of critiques he hears often: That economic development is akin to exploitation and that the gap between rich and poor is growing dangerously large. But Louw says that the focus on economic inequality is a distraction from a more important metric.

“The world is experiencing the most amazing accomplishment of humanity: The virtual elimination of poverty,” says Louw. “It’s strange that as that happens, we are talking about it as if there is more of it.”

Another illustration of “One of the Most Remarkable Achievements in Human History.”Some good news to be celebrated. The Decliners are sure that there is more poverty, more unfairness, more decline. About 9 minutes long. It is getting really hard to get a straight, true look at the state of the world. Those things which are hard and bad are ignored, misunderstood, and the dangers made light of. And the good things? We don’t even know they are happening. It would be helpful if there was way less talk about the supposed gap between the rich and the poor, and a lot more appreciation for free market enterprise that moves people out of poverty.



One of the Most Remarkable Achievements in Human History by The Elephant's Child

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Here is a chart of one of the most remarkable achievements in  human history: the 80% reduction in world poverty in only 36 years. In 1970,  26.5% of the world’s population were living on $1 or less (in 1987 dollars) to only 5.4% in 2006 — led by the 97% reduction in the poverty rate in East Asia (excluding Japan and Hong Kong) from 58.8% to  1.7% over that time period.  (Mark Perry: AEI)

It’s the greatest achievement in human history, and you never hear about it.

80 percent of the world’s worst poverty has been eradicated in less than 40 years. That has never, ever happened before.

So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.

It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.

I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.
(Arthur Brooks, President, AEI)

 



Treasury Will Pull Out All The Stops to Enforce Economic Patriotism! by The Elephant's Child

The Treasury Department could act as early as next week to stop companies from moving their headquarters out of the United States for tax purposes. “Economic Patriotism.” Where is these companies’ economic patriotism? Representative Sander Levin, ranking Democrat on the House Ways and Means Committee, which has jurisdiction over tax issues warned that “They’re preparing to act and they’ll act as soon they are ready.”

Treasury Secretary Jack Lew told Levin on Wednesday that he would not necessarily wait for Congress to go home before he would take unilateral action.  Wonder where he learned that trick?

With his brother Senator Carl Levin, (D-MI) Sander Levin has written legislation to” tighten the rules restricting so-called tax inversions, which are tax maneuvers in which U.S. businesses buy a company in a low-tax country to move their headquarters there.”

It’s the Burger King deal with Tim Horton’s Coffee Shops, and the move of their corporate headquarters to Canada, where total tax costs will be 46.4 percent lower, that has driven Democrats to start writing more confiscatory laws immediately. Burger King will continue to pay taxes on business done in the United States.

The Obama administration and Congressional Democrats have raised the alarm over possible consequences to the U.S. tax base.  Republicans  have been suggesting for some time that they should lower or eliminate the corporate tax, because the U.S. corporate tax is not only the highest in the industrial world, but the U.S. also taxes income earned abroad —which no other country does.

There is a long history going back to Martin Van Buren, of administrations that helped an economy to recover from a recession by cutting taxes. Cutting taxes allows companies more confidence in the future, and they are more apt to grow, expand, and hire — creating a better business climate— which in turn grows the economy.  Canada’s corporate tax was 43 percent in 2000, and is 26 percent today, and their economy is booming.

Democrats are fundamentally unable to grasp the idea that cutting taxes could  produce more income and make the economy grow. It simply does not compute. Treasury Secretary Jack Lew trained as a lawyer, but has simply moved through the corridors of government as a bureaucrat in one office or another. He got all huffy about the Burger King move, in a video at Bloomberg, mentioning all the advantages the U.S. provides —roads and bridges (you didn’t build that) and infrastructure!

So far as I can tell only 9 companies have actually done a tax inversion. A number have started to and backed out after being threatened.

Speaker John Boehner and Senate Finance Committee ranking member Orrin Hatch have warned that any Treasury measure that would be effective would likely lie beyond Lew’s authority.



The Scandal of Obama’s Very Own Slow Recovery by The Elephant's Child

President Obama simply cannot stop doing the things that discourage businesses from hiring, and failing to do the things that wold help improve the employment situation. The biggest downer at present is ObamaCare. The regulations that force businesses to pay for the health care of anyone working 30 hours a week have led, not to a flurry of hiring more people for 40 hour weeks, but to workers being reduced to part-time at 28 hours or less.

Grocery stores operate on a low profit margin, and schedule workers for the hours when the store is busiest. Here, and probably nationwide, more stores are converting to at least partial self-check-out lines. The same for big box stores like Home Depot. Business has never liked being in the health-insurance business, and is using this opportunity to get out of it. Every law, passed in haste, will have unintended consequences. Thoughtful people can anticipate some of them, but things do not work out as expected. In manufacturing plants, more tasks are performed by machines. Who do you call today where you are answered by a human instead of a machine?

The administration has bragged that the economy added 175,000 jobs last month, but the number of job openings actually fell by 118,000 in April. The burning desire of a statist administration is for ever more regulation, ever more control — impulses that create more unemployment. If you refuse to allow the free market to work, you don’t get much work. Economics writer James Pethokoukis plaintively asked recently “Where are the entrepreneurs?”

Starting something new is taking a big risk. People who have a great idea borrow from their home equity, relatives, friends, take out second mortgages and load on debt to start a new business. Why are so many of Obama’s backers looking for subsidies and grants from the government to start a business? To absolve them from the risk of starting on their own.

Free people strive and create; regulated, controlled people hunker down and try to save their money. We have a government at present that wants more people to be dependent on the government. They are paying people to sign others up for food stamps, for welfare, for disability—the help that you are “entitled” to. The thing you won’t see on this chart is the increase in part-time or temporary employment. The problem is not, as is often claimed, available workers lacking the skills needed for the sectors with job openings — but a broad-based lack of demand for workers. Business is hurting. If you listen carefully to the radio, you will hear all sorts of businesses advertising who have never advertised before.

The administration’s efforts to destroy free market capitalism are perhaps the biggest scandal of all.

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