American Elephants

Let’s Have Some Really Good News for a Change! by The Elephant's Child

Here at home, the plumbing disaster has evolved into a replace a bathroom adventure. Sorry about the light blogging, but some days that just the way it goes. This is merely the beginning.

So I will turn to good news for a change. How’s this for a headline? “The Era of Great Famines is Over” Here’s Paul Ehrlich writing in The Population Bomb in 1968,

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate.

—India has been suffering from widespread drought in 11 states across the country, yet the country’s foodgrain production is actually set to grow marginally, the third advance estimates released by the agriculture ministry on Monday showed. The grain production for human consumption for 2015-2016 is estimated at 252.23 million tons, marginally higher than the 252.92 million tones produced in 2014-2015 according to the data. If the estimates hold up, it implies that the damage to the farm economy is less than was feared, but also demonstrates a bit of resilience of Indian agriculture to a deficit monsoon.

—Ethiopia is moving from being “the world’s symbol of mass famines to fending off starvation.” Ethiopia could choose to avoid another disaster because “Famine isn’t caused by overpopulation, and as Ethiopia’s experience shows, it’s not a necessary consequence of drought. Politics creates famine, and politics can stop it.” The New York Times, May 8 , 2016

—South Africa aims to be malaria free by 2018. The National Health Department in confident that they can reduce locally transmitted cases to zero, because they have already managed to reduce cases dramatically.

Malaria accounts for 40 percent of all public health spending on the continent, killing up to 438,000 people each year mainly in sub-Saharan Africa.

But, the World Health Organization (WHO)’s world malaria report for 2015 states that there’s been a major decline in global malaria cases and deaths since the year 2000, with the mortality rate decreasing by 60 percent.

—In the middle of the political season, everyone seems to be angry, unhappy with Congress because they didn’t stop Obama from using his phone and his pen to accomplish all the things that he could not get through Congress, and decided to accomplish by executive order.. The media is fascinated with following unpredictable candidates around, so we aren’t hearing all that much from the rest of the world.  From Guy Sorman at City Journal:

Worry over America’s recent economic stagnation, however justified, shouldn’t obscure the fact that the American economy remains Number One in the world. The United States holds 4.5 percent of the world’s population but produces a staggering 22 percent of the world’s output—a fraction that has remained fairly stable for two decades, despite growing competition from emerging countries. Not only is the American economy the biggest in absolute terms, with a GDP twice the size of China’s; it’s also near the top in per-capita income, currently a bit over $48,000 per year. Only a few small countries blessed with abundant natural resources or a concentration of financial services, such as Norway and Luxembourg, can claim higher averages.

“America’s predominance isn’t new; indeed, it has existed since the early nineteenth century.” By the 1830s American per-capita income was already the highest in the world. It wasn’t just our size and natural resources, for other countries had those attributes.

They couldn’t compete with Americas strong intellectual property rights. The U.S, Constitution was the first in history to protect intellectual property rights, and “secured for limited times to authors and inventors the exclusive Right to their respective Writings and Discoveries.” Two hundred years later, the U.S. has more patents in force —1.8 million—than any other nation. American wages were significantly higher than those in Europe, which meant that landowners needed high levels of productivity, which meant that the mechanization of agriculture got under way in America before it did overseas.

America’s enormous territory and “the freedom people had to move and work across it” encouraged an advanced division of labor, which is essential to high productivity.

Globalization is having the same effect today, making prices drop by assigning the production of goods to countries that are relatively efficient at making them.

Immigration has been another component of American economic dynamism, for evident quantitative reasons: national GDP grows when total population and productivity increase simultaneously. But this effect has worked particularly well in the United States because its immigrants have tended to be young, energetic, and open to American values. Immigration is a self-selecting process: those who find the courage to leave behind their roots, traditions, and family often have an entrepreneurial spirit.

Guy Sorman adds:

In the current sluggish economic environment, the remarkable history of American dynamism is thus more instructive than ever. America’s economic might is rooted in an entrepreneurial culture and a passion for innovation and risk-taking, traits nourished by the nation’s commitment to the rule of law, property rights, and a predictable set of tax and regulatory policies. Policymakers have lost sight of these fundamental principles in recent years. The next era of American prosperity will be hastened when they return to them.

Do read the whole thing. It’s not long.

Uncommon Knowledge: Economist John B. Taylor by The Elephant's Child

High unemployment. Business in the doldrums, the recovery that Obama keeps promising remains elusive, in spite of his claims. Many small businesses that are the usual engine of growth are struggling. The elephant remarked yesterday that the only business that seems to be visibly expanding is the gun range.

The business organizations, the Chamber of Commerce and Small Business Association and others readily say that uncertainty is holding them back. To open and run a business is a risk. There are all sorts of uncertainties that affect your bottom line. Nobody knows what will happen tomorrow. The actions of this administration have been to increase uncertainty across the board. Will taxes go up? Are energy costs going to rise and by how much? What new regulations are going to be issued? Have I broken any regulation that I don’t even know about that will have an armed swat team breaking in my front door? What crazy new environmental regulation is the EPA going to come out with tomorrow? John Taylor explains.


Bill Whittle Summarizes President Obama’s Accomplishments at Halftime. How’s He Doing? by The Elephant's Child

Should We Bail Out the Automobile Companies? by The Elephant's Child

Detroit cannot make cars at a price the market will bear.

The only question is whether we want to kick the problem down the road, or confront it now.  As long as they cannot make cars at a price that people will pay, they will not have a functional business.  Do we think they should go bankrupt now? Do we think they should go bankrupt later? How often do we intend to bail them out?

The Surprising Story of Bar Stool Economics by The Elephant's Child
November 12, 2008, 9:00 pm
Filed under: Humor, Politics | Tags: , ,

By David R. Kamerschen, Ph.D., Professor of Economics

(This came to me in an email, so it has probably been floating around the internet.  It is so good I couldn’t resist posting it, for I’m sure some of you have never seen it.)

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.  If they paid their bill the way we pay our taxes, it would go something like this:

  • The first four men (the poorest) would pay nothing.
  • The fifth would pay $1.
  • The sixth would pay $3.
  • The seventh would pay $7.
  • The eighth would pay $12.
  • The ninth would pay $18.
  • The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said,” “I’m going to reduce the cost of your daily beer by $20.”  Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected.  They would still drink for free.  But what about the other six men — the paying customers?  How could they divide the $20 windfall so that everyone would get his “fair share?”

They realized that $20 divided by six is $3.33.  But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

  • The fifth man, like the first four, now paid nothing. (100% savings)
  • The sixth man now paid $2 instead of $3. (33% savings)
  • The seventh now paid $5 instead of $7. (28% savings)
  • The eighth now paid $9 instead of $12. (25% savings)
  • The ninth now paid $14 instead of $18. (22% savings)
  • The tenth now paid $49 instead of $59. (16% savings)

Each of the six was better off than before.  And the first four continued to drink for free.  But once outside the restaurant the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man.  He pointed to the tenth man, “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man.  “I only saved a dollar, too.  It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man.  “Why should he get $10 back when I got only two?  The wealthy get all the breaks!”

“Wait a minute!” yelled the first four men in unison.  “We didn’t get anything at all.  The system exploits the poor!!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him.  But when it came time to pay the bill, they discovered something important.  They didn’t have enough money between all of them for even half of the bill.

And that, boys and girls, journalists and college professors, is how our tax system works.  The people who pay the highest taxes get the most benefit from a tax reduction.  Tax them too much, attack them for being wealthy, and they just may  not show up anymore.  In fact they might start drinking overseas where the atmosphere is somewhat friendlier.

The question is: Are you being manipulated? by The Elephant's Child

Obama and the media have been telling us that this election is all about the economy. It must be so, because in every speech Obama has been telling Americans how miserable they are, (made so, of course, by eight terrible years of the Bush Administration), in what terrible shape the country is, (made so, of course, by eight terrible years of the Bush Administration) and how much we are hated in the world, (yes, eight terrible years).

No one is going to deny that the economy is in bad shape right now, after the sub-prime mortgage meltdown.  That is not, however,  what Obama has been on about.  He has been practicing “agitation“.

After his graduation from Columbia University in 1983, Obama spotted a help-wanted ad in the New York Times from a group that aimed to convert the black churches of Chicago’s South Side into agents of social change.  They were looking for a community organizer to run the group’s inner-city arm.  Obama moved to Chicago where he became a community organizer.  In 1985 veteran organizer Jerry Kellman hired Obama to run the Developing Communities Project.  The three who hired him were disciples of Saul Alinsky’s methods of organizing.  And Obama got a thorough grounding in the Alinsky method.

Saul Alinsky (1909-1972), Chicago native, has been called the father of community organizing.  “Agitation was a tactic he prescribed for organizing called “rubbing raw the sores of discontent“.  A tactic of searching out the source of pain in people’s lives, tearing down their egos just enough so that you can dangle an enticing bit of “hope” and “change” to make them believe that together you can make things better.

So Obama and the Democrats have been telling us that we were in a recession, long before there was one in actuality.  With unemployment at historic lows, he sought out the factory towns where a plant has closed, railed about businesses that outsource or move overseas.  He played the class warfare game, condemning “the rich”, CEOs, Exxon Mobil, and corporations in general; sure that people had little understanding of the economy and would be easy to “agitate, if he just told them how badly off they really were.

Randall Hoven at American Thinker has gathered together a snapshot of what our economy looked like in December 2006, after six years of Bush and the last month before the Democrats took over both houses of the national legislature:

♦ Unemployment stood at 4.4%.
♦ Real GDP growth over the previous four years (under a Republican President, House and Senate) averaged 3% per year.
♦ A gallon of regular gasoline cost $2.30.
♦ Even the S&P 500 stock index stood at 1418, or 84% above its post-9/11 low and more than 7% higher than when Bush took office.
♦Every year of Bush’s Presidency, real (inflation-adjusted) disposable income per person went up.  By the end of 2006, the average person was making 9% more in real terms than before Bush became President.

But the last election in 2006 was considered a referendum on Iraq.  The war was not going well.  64% of Americans said the country was on the wrong track, but 55% of Americans said the economy was in good shape.

So the Democrats have been in charge for the last two years.  Harry Reid said that the Iraq war was lost and “the surge” was not going to accomplish anything.  Senator Obama introduced legislation to prevent the surge and to remove all troops from Iraq by March 2008 — seven months ago.

As the surge succeeded, and the news from Iraq became better and better, the Democrat Congress’s approval ratings plummeted to unprecedented depths, now 12% according to the most recent New York Times poll. The Democrat Congress’s accomplishments are almost non-existent, but include mostly efforts to investigate Republicans and prove some of the scandals that they had imagined.  Although they were begged to investigate Fannie Mae and Freddie Mac, nothing came of that either.  They fought hard against any attempt to look into the soundness of the two institutions.

Apparently a large percentage of voters are unaware that the Democrats are fully in charge of Congress. The attempt to “rub raw the sores of discontent and talk the economy down proceeds apace.  The vast majority of Americans continue to pay their mortgages on time, and although unemployment has risen sharply, most Americans are still employed.  Most banks have not failed.  But it is important to the Democrat campaign effort to see that Americans are deeply unhappy and want to elect Democrats.  You are being agitated.

If you can find a speech of Obama’s that does not tell you what pathetic shape the country is in, of the desolation and joblessness and with pathetic stories of people who lost their health insurance,  or their homes, please call it to my attention.  Personally, I don’t like being agitated all that much.

What is the difference between Republicans and Democrats? by The Elephant's Child

I came across a statistic the other day that startled me.  A poll determined that only 13% of Americans could distinguish between the political parties.  That is, they could not tell you what each party stands for correctly.  I listen to talk shows, and many callers claim that there is no difference between the parties, or they credit the wrong party with the wrong policy.  Anecdotal evidence, to be sure, but the poll is at least partly right.

Can we agree that Republicans agree that small government is desirable?  Yes, I know, they have many times been responsible for vast enlargement.  Can we agree that Democrats generally feel that things are better handled by the government than by the free market?

Can we agree that Republicans believe in individual responsibility and the freedom to make of yourself what you can?  Can we agree that Democrats believe in a caring government that makes things “fair”, taxing those who are rich to redistribute wealth more equally?

Can we then agree that the subprime crisis was the result of a well-intentioned desire to make the distribution of wealth more equal by helping minorities to own their own homes?

So, is Barack Obama the visionary figure who will bring America together as he claims to be?  Or is he the far-left candidate that his record suggests?

Economists are worried.  100 distinguished economists signed a statement released by the McCain campaign:

Barack Obama argues that his proposals to raise tax rates and halt international trade agreements would benefit the American economy.  They would do nothing of the sort.  Economic analysis and historical experience show that they would do the opposite.  They would reduce economic growth and decrease the number of jobs in America.  Moreover, with the credit crunch, the housing slump, and high energy prices weakening the U.S. economy, his proposals run a high risk of throwing the economy into a deep recession. It was exactly such misguided tax hikes and protectionism, enacted when the U.S. economy was weak in the early 1930s, that greatly increased the severity of the Great Depression.

We are very concerned with Barack Obama’s opposition to trade agreements such as the pending one with Colombia, the new one with Central America, or the established one with Canada and Mexico. Exports from the United States to other countries create jobs for Americans.  Imports make goods available to Americans at lower prices and are a particular benefit to families and individuals with low incomes.  International trade is also a powerful source of strength in a weak economy.  In the second quarter of this year, for example, increased international trade did far more to stimulate the U.S. economy than the federal government’s “stimulus” package.

Ironically, rather than supporting international trade, Barack Obama is now proposing yet another so-called stimulus package, which would do very little to grow the economy.  And his proposal to finance the package with higher taxes on oil would raise oil prices directly and by reducing exploration and production.

We are equally concerned with his proposals to increase tax rates on labor income and investment.  His dividend and capital gains tax increases would reduce investment and cut into the savings of millions of Americans.  His proposals to increase income and payroll tax rates would discourage the formation and expansion of small businesses and reduce employment and take-home pay, as would his mandates on firms to provide expensive health insurance.

After hearing such economic criticism of his proposals, Barack Obama has apparently suggested to some people that he might postpone his tax increases, perhaps to 2010. But it is a mistake to think that postponing such tax increases would prevent their harmful effect on the economy today.  The prospect  of such tax rate increases in 2010 is already a drag on the economy. Businesses considering whether to hire workers today and expand their operations have time horizons longer than a year or two, so the prospect of higher taxes starting in 2009 or 2010 reduces hiring and investment in 2008.

In sum, Barack Obama’s economic proposals are wrong for the American economy.  They defy both economic reason and economic experience.
(For the economists statement on John McCain’s economic program, continue reading:)

A new survey from Chief Executive magazine found that 74% of CEOs fear that an Obama presidency would be disastrous for the country.” The survey found some CEOs worried that if implemented [Obama’s] programs would bankrupt the country within three years”

The people who know something about creating jobs or creating problems for the economy have some important things to say.  It’s worthwhile listening to them.

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