American Elephants

How Does Innovation Happen? And Why? by The Elephant's Child

Have you noticed the extent to which Democrats operate on buying votes? They will give you this benefit, or this program, or this increase if you will just vote for them? The benefits, programs or increases  are all to be paid for by the taxpayers, supposedly by a law indicating that the government is supposed to give… — but the government has no money of its own so, when Bernie wants everyone to get at least $15 an hour, either the government will order all businesses to pay $15 to all their workers, or if the government is paying government workers, they will raise everybody’s taxes enough to cover the increase. (Those who are currently working in the Bernie for President campaign are complaining bitterly because they are not getting $15 for their labor) Which demonstrates what that is really all about.

Such a “benefit” is terrible for the economy, because many small restaurants don’t pay high wages, but workers make it up in tips, and go out of business when forced to comply. And beginning workers often aren’t worth much of anything as they learn slowly how to work. And some work just isn’t worth that much anyway.

Democrats simply cannot understand how cutting taxes and allowing people to keep a little more of their own money allows them to experiment, hire, invent, expand, and how that makes an economy grow. That idea is simply beyond their understanding. They never understood the Reagan revolution that produced a long economic boom, and they do not understand why cities and states run by Democrats somehow do not prosper to the extent expected.

Republican tax cuts, they firmly believe, only go to the rich and to corporate heads and people who own businesses, and the stupid Republicans should be giving big tax cuts to the poor instead. I guess those who grew up to become Democrats had a hard time with percentages in school.  It is hard to grasp that the only way we have to understand economics is by observing the transactions between people as relayed to us by the marketplace. The ordinary buying and selling that takes place. And the observed little miracles that happen when people are allowed to keep more of their own money to do with as they choose. To buy, sell or invent.

Freedom means more than just free speech or freedom of religion. Look at all the businesses that started just because somebody had an idea. Jeff Bezos thought he could sell books online. A couple of bicycle shop people thought they could build an airplane. Henry Ford thought there was a better way to put a car together and created the production line. And there is currently a gentleman who decided he could make better bed pillows by tearing up foam rubber into little pieces. I sleep soundly on one of them.

Tightly controlled societies don’t offer much opportunity for the ambitious. But America has garages and workshops all over the country where nascent businesses are being hatched. Where else in the world do you find “Go Fund Me” programs on the internet? Why does all that happen here, and not in the many countries that really, really need innovation and invention?

When FDR tried desperately to get us out of the Great Depression, he had no idea what to do, and settled on “pump-priming” or in the words of a more recent president, “stimulus”. Spending a lot of government money in the “right places” to get the economy moving. Two economists from UCLA, Lee Ohanian and Harold Cox, determined that FDR extended the Depression for seven years longer than if he had done nothing. The federal government has no money of its own. As far as that goes, city governments have no money of their own either.

It is interesting how many Democrats are quite sure that getting rid of Capitalism is the solution. Keep in mind that that is the goal of the climate change movement.

CBO Destroys Democrats’ Utopian Dreams by The Elephant's Child

Democrats don’t seem to have a high opinion of ordinary American citizens. They usually want to buy their votes, with some promised legislation. Their big, big idea has been raising the minimum wage to $15 an hour. Trouble is some people simply aren’t worth the raise. There has to be a spot in our economy for people just starting out, who don’t yet know how to be useful workers. Some businesses are too small to pay that much, and must either do the work themselves or give up the business.

The Congressional Budget Office has estimated (their median estimate) that under the $15 an hour option, 1.3 million workers who would otherwise be employed would be jobless in an average week in 2015. (That would equal an 0,8 percent reduction in the number of employed workers).

Zero Hedge has the full CBO report, with graphs and a thorough explanation of the effects.

The $15 option would affect family income in a variety of ways. In CBO’s estimation, it would:

  • Boost workers’ earnings through higher wages, though some of those higher earnings would be offset by higher rates of joblessness;
  • Reduce business income and raise prices as higher labor costs were absorbed by business owners and then passed on to consumers; and
  • Reduce the nation’s output slightly through the reduction in employment and a corresponding decline in the nation’s stock of capital (such as buildings, machines, and technologies).

On the basis of those effects and CBO’s estimate of the median effect on employment, the $15 option would reduce total real (inflation-adjusted) family income in 2025 by $9 billion, or 0.1 percent.

The Obama Administration Stuck their Foot In It Again. by The Elephant's Child

The misnamed Affordable Care Act has a mandate to require religious-affiliated employers to provide free contraceptives for their workers. This includes church-run hospitals, schools, universities and charities, and includes the morning-after pill. Catholic leaders reacted angrily when the administration announced that it would hold most religious institutions to that mandate — even including those who have moral and religious objections to “abortion-inducing drugs.”

This is, on the part of the Obama administration, a bid for votes from pro-abortion feminists — probably unwise — for there are way more Catholics than there are pro-abortion feminists. The medical community has spoken out, noting that if Catholic hospitals shut down, the rest of the medical community would be unable to absorb the patients. There are always consequences.

The secular left claims to be tired of religious groups operating secular enterprises like schools and hospitals, taking taxpayer dollars and then claiming that deeply held religious belief should exempt them from public policy.  Others point out that the issue is not that these institutions take taxpayer dollars, but that they serve the public, rather than being exclusively religious in nature.  Megan McArdle chimed in at the Atlantic:

These people seem to be living in an alternate universe that I don’t have access to, where there’s a positive glut of secular organizations who are just dying to provide top-notch care for the sick, the poor, and the dispossessed.

In the universe where I live, some of the best charity care is provided by religious groups–in part because they have extremely strong fundraising capabilities, in part because they often have access to an extremely deep and motivated pool of volunteers, and in part because they are often able to generate significant returns to scale and longevity. And of course, the comparative discretion and decentralization of private charity, religious or secular, makes it much more effective in many (not all ways) than government entitlements.

In this world, I had been under the impression that we were providing Catholic charities with federal funds mostly because this was the most cost-effective way of delivering services to needy groups.
I’m not sure that I understand why insurance should cover contraceptives anyway, for continually adding more costs to an already unaffordable health-care mandate that is going to wreck the economy, seems unwise. Aren’t there some things that we should pay for ourselves? Pregnancy is not a disease.

 It is always popular when the government offers to give you — for free — things that you previously had to pay for.  That is how the left gets gullible people to support the welfare state. They want your votes, and they are quite prepared to buy them.  They will say they are doing it for you, because you need it, but that is a lie.  They want to buy your votes because they want to retain power, and remain in control of the economy and the people.
That’s how it always works. They promise gifts and goodies in order to get control, but it results not only in a loss of liberty, but in increasing control, and decline and despair until the people revolt. There’s something about ignorance of history…

More College Graduates Aren’t Necessarily a Good Thing. by The Elephant's Child

President Obama stopped in at the University of Colorado on his Wednesday campaign swing, to urge thousands of college students to make their voices heard:

Young people, I need you guys involved. I need you active, I need you communicating to Congress, I need you to get the word out. Tweet `em. They’re all tweeting all over the place, you tweet `em back.

“The president took off his jacket and rolled up his sleeves on the last stop on a 3-day fundraising swing through the West that mixed high-dollar fundraising with new announcements of modest executive actions to circumvent Congress,” reported the AP.

We can’t wait for Congress to do its job, so where they won’t act, I will. I am going to do everything in my power to make a difference for the American people, but Denver, I need your help.

So to get the help of young people, Obama plans to have taxpayers pay for student loans.  He has a lot of opportunity in this area because he early on had the federal government take over the student lending business in America.  He claimed the measure would be a cost-savings measure, saying that the old system of privately-issued, government guaranteed loans reduced the amount of money available for needy students and prevented the feds from making the system more efficient.

Now he is using that new power to obtain a taxpayer-financed stimulus that Congress would not approve.  The idea is to cap student loan rates at 10 percent of a debtor’s income that is above the poverty line, then limiting the life of the loan to 20 years.

So assume that Jerusha Jones gets into Old Ivy University and borrows, in a government loan, the$200,000 she needs to get an undergraduate degree in women’s studies.  Her repayment schedule will be based on her earnings.  If she opts for public service and takes a job as a city social worker earning $25,000, her payments will be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total.  After twenty years at that rate, taxpayers would get back just $28,220 of their $212,000 loan to Jerusha. [Example shamelessly borrowed from Chris Stirewalt because he already did the math.]

Student debtors will be able to refinance and consolidate their loans on more favorable terms, so they pay less.  You can see how this is a major cost-saving measure, for the students at least.Though according to a report on the radio news, student debts from years previous to Obama’s term in office would not be eligible .

This is coming at a time when many economists are warning of a college debt bubble that is distorting the entire picture. Cheap credit on easy terms increases the amount of money chasing the diploma, allowing schools to further increase prices — which have been hugely outpacing inflation for years. Tuition and fees at public four-year colleges and universities jumped 8.3 percent this year. Private, non-profit colleges raised tuition and fees 4.5 percent — still twice the rate of inflation.

So Obama can run up the national debt with a stimulus that Congress would not pass, and buy the votes of gullible college students. He plans the same trick with underwater mortgages — raising the debt by executive order to lower homeowner’s mortgage payments.

Government interference has enabled colleges and universities to raise their rates to ridiculous levels. And of course each institution raises their rates in line with everybody else. Did you never wonder why there isn’t a splendid example of someone holding down costs? Schools have added administrative staff, built new facilities, landscaped, added climbing gyms, theaters, and elaborate labs. Also grade inflation, fun classes, silly studies, and graduates that can’t read well, write clearly, or have any understanding of history.   Go figure.

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