American Elephants


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.



The Stories Told to Justify a Very Bad Bill. by The Elephant's Child

The real reason behind ObamaCare, said Byron York in an interesting article in the Examiner:

It wasn’t just about making insurance more affordable. It wasn’t just about bending the cost curve. It wasn’t just about cutting the federal deficit. It was about redistributing wealth.

Health reform is “an income shift,” Democratic Sen. Max Baucus said on March 25. “It is a shift, a leveling, to help lower-income, middle-income Americans.”

In his halting, jumbled style, Baucus explained that in recent years “the maldistribution of income in America has gone up way too much, the wealthy are getting way, way too wealthy, and the middle-income class is left behind.” The new health care legislation, Baucus promised, “will have the effect of addressing that maldistribution of income in America.”

Former Democratic National Committee chairman and presidential candidate Howard Dean said, around the same time, that the health care bill was needed to correct economic inequities.  Democrats rate what they call “social justice” highly, for it gives them warm fuzzy feeling to “take from the rich to give to the poor.”

This is based on the idea, deeply favored by the Left and based on one of the biggest fallacies in economics, that an economy is a ‘zero-sum’ situation.  That there is only a fixed amount of money in an economy, and for one person to get rich, others must get poorer.  Lately the cause of people getting richer has been the technological revolution that is transforming the world.

“The Industrial Revolution,” pointed out John Steele Gordon, “produced so many new rich that Benjamin Disraeli had to coin the word millionaire in 1827 to describe them. Railroads, steel, oil, automobiles, the movies, television, all produced prodigious new fortunes.”

The dynamic American economy has always produced vibrant movement over the income classes.   The poor get richer, the rich get poorer.  Even the Forbes Magazine list has new entrants every year, while other names drop from the list. The poor may always be with us, but they are not the same people over time, nor are the rich.

Senator Baucus may just have been trying to encourage his leftist constituents,  to whom everything seems more virtuous if clothed in the cloak of wealth redistribution.




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