The Inequity of it All

Today is my Birthday.

What I want for my birthday is for Liberals to stop thinking with their emotions and be rational, logical adults who aren’t narcissistic, greedy, power mad, 2 years old at heart.

Not going to Happen.

Neither is getting Establishment Republicans and RINOs to stop being narcissists and thinking only of their own agenda and thinking about The American People for a change.

I might as well wish for World Peace at the same time, it’s just as likely.

Strike up a conversation with any taxi cab driver or any fry cook at a roadside diner and the word “inequality” is unlikely to ever come up. That’s not on the list of top concerns for middle class America. It’s also not on the list of concerns for the world’s poor. Millions of people are willing to risk life and limb just to come here and start out at the bottom of the income ladder.

(Don’t the immigrants realize how unequal things are? Yes, they want to live in a country where a poor immigrant can become a billionaire.)

So why is anyone claiming that inequality is our most important problem? Because the chattering class has decided that stoking envy is the only way to energize the Democratic Party. Think about the problems we really do have: runaway entitlement spending, poor public schools, welfare dependency, an overly burdensome tax system and anemic economic growth. In every case the solutions we are debating come from the right: Privatization, school vouchers, tough love, a flat tax and lower taxes on capital.

The left has no solutions, or at least none that anyone takes seriously. So, over the years of the Obama presidency the topic of inequality has emerged front and center. Democratic candidates could rail against the super rich and imply that their high incomes are the cause of everyone else’s stagnating income, without ever saying what exactly they would do about it.

Until Bernie Sanders came along. Sanders actually has a few concrete proposals – including the idea that we should become like Denmark, a high tax welfare state. Once the discussion turns from pure demagoguery to serious conversation, inevitably we are forced to look at what economists have to say. (Warning: it’s not good for Democrats.)

In other words, you can’t solve the problem by taxing the rich. If taxation is your only tool, you have to break again one of Barack Obama’s frequently broken promises and raise taxes on the middle class.

In a Brookings Institution study, Peter Orszag (former chief economist for President Obama) and his colleagues discovered that if you raised the top tax rate from 40 percent to 50 percent and redistributed that money to people at the bottom, the top 1 percent’s share of income would only decline from 16.4 to 15.6 percent. The Gini coefficient (the numerical measure of inequality) would change so little you would have to squint to see it.

Then there is the question of why we have increasing inequality in the first place. Another study by Orszag and current Obama chief economist Jason Furman found that a primary source of inequality among people is inequality among firms. Take a look at the chart below. If you happened to be working for one of the top 10 percent of most successful companies over the past two decades your salary, bonuses and other compensation probably soared. If you have been working for the median firm, your income has probably risen modestly. If your employer is in the bottom half of the distribution, your income has probably been stagnant.

So what can be done about that? The idea of arresting the growth of highly successful companies is silly. But that isn’t necessarily a deal breaker for the left. The problem for Democrats is that Silicon Valley is heavily Democratic. It’s one of the places Democrats go to get mega gifts. My bet is that you won’t hear a peep about inequality among firms in the coming election.

orszag chart

 

SOURCE: KOLLER ET AL. (2015); MCKINSEY & COMPANY

That leaves Denmark. People on the left are fond of citing the Nordic states — Denmark, Sweden, Norway, Finland, and Iceland — as examples of countries with higher taxes and less inequality. It’s easy to see why. As Matt Yglesias writes

Danish mothers enjoy 18 weeks of guaranteed maternity leave at 100 percent of their ordinary pay. Danish students leave college free of debt. Everyone is covered by a national health insurance system and can take advantage of subsidized child care; plus, thanks to a generous welfare system, Denmark’s child poverty rate is about a quarter of America’s.

So how do the Danes afford all that? With high taxes. As Yglesias makes clear, it’s not just taxes on the rich. The top tax rate in Denmark is 57 percent, about the same as it is in California. If California wanted to become like Denmark, it would basically leave the rich alone. But it would have to sock it to the middle class with effective tax rates averaging from 35 to 48 percent. Then the state would need to pile on with 25 percent value added tax — which is basically a form of sales tax and every bit as regressive. Car addicted Californians would also experience a huge spike in the price of gasoline and a 180 percent tax on the price of a new car!

So how does Denmark keep from looking like Greece? Answer: They believe in privatization, deregulation and free enterprise. Denmark is rated as one of the best places in the world to do business. It scores higher on the Heritage Economic Freedom ranking than the United States does. Unlike the US, public sector unions in Denmark don’t control public services and push up costs with job protecting regulations. For example, a private, for-profit company is currently in charge of 65 percent of municipal fire departments and 85 percent of ambulance services in the country. According to Yglesias:

In Copenhagen … the metro is driverless, the suburban rail network features one-man train crews, and many urban bus lines are run by private companies. These are all kinds of measures that US labor unions would normally oppose….

Øresund Bridge from Copenhagen to Malmö was constructed at a drastically lower price than the United States is prepared to spend to replace the Tappan Zee Bridge in New York even though the Nordic bridge is substantially longer and includes a major train component along with the roadway.

The Danish model is awfully hard to emulate if public sector unions are the backbone of your party.

Finally, there is Yale law professor Stephen Carter’s observation that the word “inequality” was used eight times by the candidates and once by the moderator in the Democratic debate the other night. In every instance the focus was on taxing the rich, not on helping the poor. In fact, the word “poverty” was used hardly at all. Apparently, envy sells better than charity when communicating with Democratic voters.

Yet Carter, himself a bona fide liberal, notes that we don’t really have an inequality problem. We have a poverty problem.

That Democrats ignore it is hardly surprising. When is the last time you heard a Democratic candidate for president talk about the poor in any respect? The last one I can remember was John Edwards and that was eons ago. (Townhall)

And look what happened to him… 🙂

Oh, the inequity of it all.

 

Self-Reliance

Somewhere between people fleeing the tyranny of monarchy and the class system and the unfair practices it fostered, the folks looking for the freedom to practice their deeply held religious beliefs – those ordinary human beings who only wanted a chance to control their own lives and fortunes with their wits and sweat and the adventurers who wanted to be a part of taming a new land – yes, somewhere between this breed of men and women and the present day, America’s train has jumped the track.

There was a time when a mule and 40 acres was considered a sufficient starting place for a person to stand on their own two feet and begin to build his fortune. A little hard work and good planning could result in a good lifestyle and a healthy nest egg to see him through his golden years.

There were no entitlements, no health insurance and no government subsidies for a failing crop or a bankrupt business venture. The only safety net available was the grace of God and what you could either grow, shoot or catch, and that was all you had to live on.

Of course, times have changed and modern man has modern problems, and the relatively soft lives we live have weakened the independent, pioneer spirit that was once so necessarily prevalent in those who conquered and settled this land.

The rank and file can no longer be expected to go out and face a wilderness with only a plow and a gun. But, all things considered, should the scale of independence and self-reliance have fallen to the point that so many of us think we can’t make it without assistance from an intrusive and increasingly socialistic government?

There are people who seem to think that the entitlements they receive grow on trees, that the bureaucracies just go into the orchards and harvest what they need.

A lot of these same people seem to think that anybody who has accomplished and accumulated anything has done so by hook and crook or by taking it away from people like them. They believe that they deserve a piece of the American Pie for doing nothing more than breathing, that there needs to be a mass redistribution of wealth, and they never consider that even now the tax rates in America have chased American industry to foreign shores, where the goods are manufactured and sold back to America without benefit of the jobs they provide.

They look at Obamacare as if it were a gift from a benevolent president, a guarantee of affordable, quality health care for all, and they never realize that the principle of “every action has an equal and opposite reaction” is very much in force. They will not realize it until the full ramifications of this deception reaches fruition and doctors start retiring, hospitals start closing down and the development and production of new medicines start to slow to a snail’s pace.

They look at “taxing the rich” – the perennial cry of the liberal block – as the just way to settle our fiscal problems, never realizing that it is a farce, that even if the total wealth of every millionaire and billionaire in the United States of America were confiscated it would not be enough to even pay the National Debt.

And the truly tragic part of that attitude is that they just don’t realize that money printed without true value to back it up is worthless. The entire monetary system of Planet Earth is in danger of imploding. If, and maybe, I should say, when, America’s currency becomes so devalued that the world will no longer accept it as the standard of international trade and America has to buy another nation’s currency to pay for all imports, the game changes radically.

When the rabid inflation that is unseen by most and hidden by the smoke and mirrors of politics, and is even now nipping at the heels of our tenuous fiscal debacle, catches up, and the Fed begins the interest rate climb – when our devalued currency rate will require the entire GNP just to pay the interest on the National Debt – entitlements, health care, food stamps and every other government assistance will be severely reduced or cut out altogether. The whole system of government dependence will fold like a house of cards and there will be confusion and violence in the streets that this country has never seen.

Because when the gravy train finally slows down and stops, many of the people who have ridden it for years simply won’t understand why it stopped. They will have become so dependent on government that they won’t have any idea how to carry on their lives without it. Look at what’s happening in Greece.

I’m certainly not smart enough to have the answers, but I am smart enough to see that if drastic measures are not taken immediately, if America doesn’t go back to work, if the politicians don’t stop spending, if the coming generations aren’t taught at least a modicum of self-reliance, America is doomed to the trash heap of history along with all the other nations whose train came off the tracks.

Maybe it’s a good time to buy a garden hoe and a gun.

What do you think?

Pray for our troops and the peace of Jerusalem.

God Bless America

Charlie Daniels