American Elephants

Inequality, Hypocrisy, Pretense, Lies, and Politics of Course. by The Elephant's Child

The Democratic Party has made it clear that they are planning to run on “Income Inequality” in the 2014 midterm election. Liberal Washington Post writer Greg Sargent has suggested that this strategy is part of the reason for Harry Reid’s embarrassing war on the Koch brothers.

When all else fails, you rely on “class warfare.” Otherwise defined as “envy,” one of the Seven Deadly Sins. Liberals’ ideas about income inequality always involve higher taxes on the rich, and more government benefits for the poor. Most of the people who are currently suffering from income inequality would prefer to have a decent job. After six years Obama’s policies still aren’t  creating jobs.

The number of long-term unemployed increased by 203,000 — at the same time that Obama brags about total non-farm payroll employment increasing by 175,000 —  you see the problem. The labor force participation rate remains at only 63 percent, a level not seen since the stagflation of the 1970s, and well below the rate when President Obama took office.

Where is Income Inequality the greatest? The gap between the wealthy and the poor is most extreme in several of the United States’ most prosperous and largest cities. The economic divides in Atlanta, San Francisco, Washington D.C., New York, Chicago and Los Angeles are significantly greater than the national average.

The one city that has hardly noticed a recession is Washington D.C.  There is plenty of income inequality, but more than half the members of Congress are millionaires. Members have long been  far wealthier than the typical American, but now a majority of members are, for the first time — millionaires.

So, if almost everybody is a millionaire, and Harry Reid certainly is, why is he at war with the Koch brothers? Liberal politics is seldom about what it claims to be about. The war on the Koch brothers is about discouraging any wealthy American from donating to the Republican party. That is what the IRS scandal is largely about — if you donate to the hated Republicans, we will attack you and make your name a poison among right-thinking people.

Democrats, on the other hand, are bountifully financed — contrary to all claims of thousands of small donations from regular folks — by the Democracy Alliance, a shadowy non-profit, self-described “liberal organization” which serves as a funding clearinghouse for progressive groups. DA members, called “partners,” include individuals and organizations alike. Partnership is by invitation only. There originally was an initial $25,000 fee, and $30,000 yearly dues thereafter. They must give at least $200,000 to groups which the Alliance endorses. There are at least 100 donor-partners. Members and staff have been working to establish subchapters in all 50 states.

There’s George Soros; Taco Bell heir Robert McKay; Tides Foundation founder Drummond Pike; Golden West Financial Corp. founders Herb and Marion Sandler; the AFL-CIO; Television producer Normal Lear; Progressive Insurance Co Chairman, Peter Lewis — for a sampling of partners. So you can see why attacking the philanthropic Koch brothers is so important. And why President Obama’s  IRS has gone to such lengths to illegally discourage donors to the Republicans with audits, searches and questionable investigations.

The man who professes solidarity with the poor has seen poverty increase every year of his presidency. His supporters and bundlers grow richer on government contracts, subsidies or grants to “green” start-ups that promptly go bankrupt. He claims to care deeply about the future of poor black children, yet teacher’s union opposition to charter schools trumps the most successful route to success for poor black kids. Charter schools have produced markedly better test scores than traditional public schools.

Inequality is no barrier to growth. There are no negative macroeconomic effects of inequality. We need to grow the ranks of working adults and shrink the rolls of those dependent on government.

The President’s latest big idea is “manufacturing hubs”— the first has been in operation in a once-abandoned furniture warehouse in Youngstown, Ohio. This  first in a series of ‘America Makes‘ operations is supposed to ensure “a steady stream of good jobs” into the 21st century. The focus is Three-D printers. The problem is that once they are programmed and loaded with raw materials, they work their magic with not a single human hand. If they are ever widely adopted, the main reason will be that they use less labor than traditional manufacturing.

Typical, typical, typical. The “ruling class” who are supposed to be ever so much smarter than any of us, have not, as usual, done their homework. Oh, they have some statistics, and some studies — but they are missing plain old common sense. So busy congratulating themselves on their brilliance, they have no understanding of how the world works; and the people they disdain as dumb, and needing job training, and food stamps, and welfare, and handouts, need government to get out of the way and give them a chance. Here’s the sleek new workplace of the future with an ever-declining need for workers. Go figure.

3D printers of all shapes and sizes fill the studios at America Makes, the National Additive Manufacturing Innovation Institute in Youngstown, Ohio


Income Inequality: Myth or Reality? by The Elephant's Child

You have to be remarkably unfamiliar with economic facts to buy into the story that the top 1% have been exploiting the 99% for decades. But the Occupy movement, supported by the liberal establishment, seems to believe just that. The rich have been getting richer at the expense of the middle class and the poor.

How does that work?  How does somebody get rich? In the most prominent cases that we know about, it’s making something that other people want — something like iPods and iPhones and iPads or Windows operating systems or X-Boxes, or for that matter — Big Macs. They buy a whole bunch of iPods. That’s how some rather famous rich people got so rich. You made them rich, you consumers, by buying their products.

Well, they didn’t need to charge so much for that stuff.  They were too expensive. What is the right price? Often the first examples of a product are very expensive. Think very large TV screens, can you remember how much the first ones cost?  And you were probably not prepared to spend that much, but quite a few wealthy people were, and as lots of wealthy people bought one, economies of scale allowed the manufacturers to reduce the price. An exchange (a sale) takes place when the buyer and seller agree on a fair price. If it’s not fair — you wouldn’t have paid for it, would you?

So who made the 1% wealthy? Consumers! And what did you think the wealthy do with their money?  Do they put it under their mattresses?  Maybe they buy yachts. And if they do, they hire a boat builder to build it, and that involves a lot of workers, and all the accessories require factories that employ lots of workers to produce all the materials that go into building a yacht. And all those workers who made a good living constructing a yacht or assembling  fish-finders or making sails and winches, and building engines go out and buy things and pay taxes, and the economy grows.

Economist  Walter Williams uses Joanne Rowling as an example.  She was a welfare mother in Edinburgh, Scotland, who followed her dream and wrote a book.  She had a hard time selling it, but eventually ended up with Scholastic as a publisher, and as they say, the rest is history. Her Harry Potter novels and movies have made her the world’s wealthiest author.  She sold some 500 million books, and the kids are to blame.  So to all those ‘Occupy’ people who are whining because they ran up too much student debt getting their English degree — go home, start writing and stop whining.

During the 2008 campaign, candidate Obama said “The project of the next president is figuring out how do you create bottom-up economic growth, as opposed to the trickle-down economic growth that George Bush has been so enamored with.”

President Obama hasn’t been able to figure that out, although Republicans keep trying to tell him how it works.  Income inequality has been growing significantly on his watch, one measure shows it has climbed 5.7% since he took office.  The rich actually got poorer under Bush’s eight years, the wealthiest 5% of U.S. households saw incomes fall 7% after inflation.  During Clinton’s eight years, the wealthiest 5% saw their incomes jump 45% compared to 26% under Reagan.  The Bush “tax cuts for the rich” increased progressivity in the tax code. The rich got the smallest percentage tax cut.

The envious folk who are so sure that “the rich” or the top 1% are getting rich by somehow cheating them are partially right. What was unusually prominent at the Occupy encampments was the profusion of iPods, iPhones, iPads and laptops, expensive tents, down-filled sleeping bags, that perhaps they didn’t pay for themselves, but somebody did on their behalf.

Wealth doesn’t exist in a pie shape where if one person gets more — someone else got less. It doesn’t work that way. The pie is infinitely growing or shrinking.  If someone makes a popular new product and gets rich — the supply of money increases to compensate for that.  If the supply of money increases greatly without new products or services that require that increase, you have inflation — too much money chasing too few products and services, and it takes more money to purchase the same things, and everyone gets poorer.

Governments are not very skilled at controlling these things. They are far more expert in taking money away from taxpayers and giving it to favored supporters. President Obama speaks against “the rich” and “millionaires and billionaires” at every opportunity, making class warfare a central theme of his reelection campaign. At the same time, he is funneling taxpayer money in the form of subsidies to the very rich people who supported his 2008 campaign. The words of his mouth seldom match his actions.  Watch what he does.

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