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February 09, 2009

Nailing It

Glenn Reynolds features a must-watch exchange on greed, government, and incentives. If you do nothing else on the Intertubes today, go and watch it.

Listening, the Editorial Staff were reminded of a passage from Barack Obama's inaugural speech that really stuck in our craw:

... it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path towards prosperity and freedom.

For us, they packed up their few worldly possessions and traveled across oceans in search of a new life.

For us, they toiled in sweatshops and settled the West, endured the lash of the whip and plowed the hard earth.

For us, they fought and died in places Concord and Gettysburg; Normandy and Khe Sanh.

Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we might live a better life.

Rarely have we read something more fundamentally dishonest than this. One has to wonder about the value of being a gifted public speaker if it allows a politician to get away with passing off arrant nonsense like this without being laughed off the television set.

It's fairly safe to say that when my great, great grandmother crossed this country in a Conestoga wagon, she wasn't doing it for me. Nor was she doing it for Barack Obama, or because it would one day help Michelle's children.

She did it because she was a spirited, independent woman who wanted a better life for herself. And when she got to California and found she didn't care for it, she came back.

It seems highly unlikely that she did that for us, either. We are reminded of a conversation with a liberal friend in NYC the day after the election. The Editorial Staff stated our conviction that the American people had no idea what practical outcome they had just voted for, to which our friend gently replied that "something" needed to be done (and soon!) to alleviate the economic distress ordinary Americans were suffering.

In response, we sent her
this column:

The real "change" being put to a vote for the American people in 2008 is not simply a break from the economic policies of "the past eight years" but with the American economic philosophy of the past 200 years. This election is about a long-term change in America's idea of itself.

...With this election, the U.S. is at a philosophical tipping point.

The goal of Sen. Obama and the modern, "progressive" Democratic Party is to move the U.S. in the direction of Western Europe, the so-called German model and its "social market economy." Under this notion, business is highly regulated... Business is allowed to create "wealth" so long as its utility is not primarily to create new jobs or economic growth but to support a deep welfare system.

...The political planets are aligned to make this achievable. In the aftermath of the financial crisis, prominent Democrats, European leaders in France and Germany and more U.S. newspaper articles than one can count have said that the crisis proves the need to permanently tame the American "free-market" model. P.O.W. Alan Greenspan is broadcasting confessions. The question is: Are the American people of a mind to throw in the towel on the system that got them here?

...Cowboy Capitalism built the country. More than any previous nation in history, the United States made its way forward on a 200-year wave of upwardly mobile, profit-seeking merchants, tradesmen, craftsmen and workers. They blew out of New England and New York, rolled across the wildernesses of the Central States, pushed across a tough Western frontier and banged into San Francisco and Los Angeles, leaving in their path city after city of vast wealth.

The U.S. emerged a superpower, and the tool of that ascent was simple -- the pursuit of economic growth. Now China, India and Brazil, embracing high-growth Cowboy Capitalism, are doing what we did, only their cities are bigger.

Now comes Barack Obama, standing at the head of a progressive Democratic Party, his right hand rising to say, "Mothers, don't let your babies grow up to be for-profit cowboys. It's time to spread the wealth around."

What this implies, undeniably, is that the United States would move away from running with the high GDP, high-growth nations rising today as economic and political powers and move over to retire with the low-growth economies we displaced -- old Europe.

As noted in a 2006 World Bank report, spending in Europe on social-protection programs averages 19% of GDP (85% of it on social insurance programs), compared to 9% of GDP in the U.S.

The problem, as Alan Greenspan notes in the video Glenn highlighted, is that what liberals like to call "greed" always attaches to the other guy's self interest - never to our own. Few people exert themselves for long out of pure altruism. As I observed to my friend, economics is nothing more than the science of human decision making in the presence of scarce resources, and any economic policy built upon a faulty understanding of human behavior is doomed to fail. Had LBJ thought a bit more about the role of incentives, he might have had a better exit strategy for the War on Poverty and we might not be looking at a 70% illegitimacy rate in the black community that didn't exist before the federal government decided to lend black families a helping hand:

Barack Obama just finished telling us that it is not only morally acceptable, but good (!) to take what one man earns and give it to a man who did nothing to earn it.

I don't agree. I think it's not only counterproductive from an economic standpoint (it creates disincentives to production and rewards inefficient and irresponsible decisions) but profoundly immoral. I don't believe it's my responsibility as an American to go to work every day and then give him part of my earnings to buy a new car or computer for some other American (as Barack Obama said in several recent speeches). That is not free enterprise.

It is socialism - pure and simple - and McCain and Palin were not wrong to call him on it.

There is a profound difference between funding a safety net for society's weakest members and using taxation to transfer income from the rich to the middle class.

There is a profound difference between using progressive taxation to fund minimum government services from which everyone - rich or poor - benefits, and using progressive taxation to take money from the rich and give it to anyone who makes less than they do on the theory that it's inherently unfair or unjust for one person to make more than another.

You argue that we are "worse off" now. Worse off than whom? Europe? Right now, they are in worse shape than we are and yet that is precisely the direction in which Obama wants to take us.

Economics is no more and no less than the science of how humans behave in the presence of scarcity, and since human behavior hasn't changed in recent memory, none of this is exactly rocket science.

No rational human being - except for Barack Obama and everyone who just voted for him - believes confiscating more of a worker's income motivates him to be more productive, or even to stay at the same level of production.

No rational human being - except for Barack Obama and everyone who just voted for him - believes that increasing the cost of saving and investment (this is what happens when you increase the capital gains tax) or increasing the cost of running a business in America (this is what happens when you raise corporate taxes) will encourage Americans to do more of these things.

Economies grow and jobs are produced when people take risks and work hard in anticipation of receiving some tangible benefit - when they can reasonably expect to be better off as a result of their actions. They respond to incentives. People don't work for "fairness". They work for profit.

You show me an entrepreneur who works 80 hour weeks, risks losing his home, and asks only for a heaping helping of income equality in return and I'll show you someone who is certifiably insane. This is why immigrants leave their countries and come here - because in America, they were free. Free to compete. Free to succeed. Or fail. Not anymore.

Adam Smith is rolling over in his grave.

Posted by Cassandra at February 9, 2009 06:56 AM

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In response, we sent her this column:

Is she still speaking to you?

Posted by: BillT at February 9, 2009 09:55 AM

Absolutely. I believe in a personal obligation of charity and generosity. That means I believe I'm obligated to give away my own money to people that I feel called upon to help. Sometimes it makes me feel good, and sometimes it just makes me feel I've done my duty.
What I'm NEVER entitled to do is try to create those feelings in myself by forcing other people to give away THEIR money to the objects of my own charitable impulses. Voting to force other people to take care of our own charitable duties or wishes is not evidence of enlightened altruism. It's just sneaky theft.

Posted by: Texan99 at February 9, 2009 10:00 AM

Oh yeah! We get along great.

She is very smart and great fun to argue with.

A lot of my friends are either Democrats or liberals. There are coherent arguments to be made for many liberal policy positions. I don't happen to agree with them, but then they don't happen to agree with my policy positions either!

I don't think it does much good to argue in an echo chamber. Finding smart people with whom you disagree (and there are quite a few of those here at VC - many are my closest friends :p) helps prevent hardening of the mental arteries - something to which we're all prone. She has made several good points during our talks that have caused me to stop and think over my principles, and also helped me to understand how rational and informed people on the other side think.

This is a good thing, I believe.

Posted by: Cassandra at February 9, 2009 10:02 AM

She is a friend from HS. It's hard to find women who can engage in spirited political argument without taking disagreements personally.

This woman is so smart that she doesn't feel threatened even when I go to the mat with her. She is unfailingly courteous and rational.

Kind of restores your faith in the possibility of the two "sides" understanding each other. It may help that we're probably both on the moderate side of our respective political traditions.

Posted by: Cassandra at February 9, 2009 10:06 AM

The "Leap-Of-Faith" required by your friend is unreasonable. I am expected to continue working 12 hour shifts, weekends as required, night shifts as required to maintain my chosen lifestyle, save for the future, pay off my mortgage, and live within my means. I am further expected to believe that an artist dependent on government giveaways for such abominations as "Piss Christ" is providing the same amount of effort in an endeavor I find obscene.

Ten-to-one the erstwhile leak-in-the-payroll, I mean artist, is thrilled that I work my butt off so he/she/heshe only works as the inspiration moves them.

Here is another alternative. I take my money and retire early and reduce my tax exposure by moving to a state without an ocean view!

Posted by: vet66 at February 9, 2009 10:26 AM

Great post here!

Would you like a Link Exchange with our new blog COMMON CENTS where we blog about the issues of the day?


Posted by: Steve at February 9, 2009 05:05 PM

Freedom's just another word for nothing left to lose... Is it tea-party time yet?

Take heart vet66. Remember, dissent is patriotic. But to forget to pay ones tax is the highest form of a bureaucratic functionary's bonafides. Blame math mistakes if the failure to file correctly comes to light and you too could become a U.S. Treasury Secretary.

Then again we could go pick lettuce for $50.00/hour under assumed names and be the net recipients of Federal, state and local largess in the form of stimulus dollars, health care, subsidies for food, beer, education, housing, etc., etc., etc.

And always looking for the silver lining in the politicians pocke... er, clouds, by cracking into the White-Collar Lettuce Picking Guild, we might be able to get the attention of that hawt lawn chicka that breezes around here from time to time.

So chin up and keep your powder dry.

Posted by: Bobby McGee at February 9, 2009 07:23 PM

Here is another alternative. I take my money and retire early and reduce my tax exposure by moving to a state without an ocean view!
Posted by: vet66 at February 9, 2009 10:26 AM

I want the Ocean View, too...and already bought the land that has it.

Regarding "El Presidente", I think that it's going to be a long four (Possibly 8? Heaven forfend!!!) years...

Posted by: camojack at February 10, 2009 01:21 AM

Good 'ol Steve. He must have, what, 5 websites he's shilling link exchanges for.

Um, what were we talking about again?

Posted by: John of Argghhh! at February 10, 2009 03:56 PM

You folks apparently haven't been hanging out on the approved blogs. If you had, you'd know:

1) The root reason that some people make more money than others is that they are the recipient of privilege, generally due to the color of their skin making them part of the ruling class.

2) Companies that make profits do so by exploiting their laborers, who have little choice in getting other/better jobs.

3) People who are poor are in such a state due to circumstances beyond their control. Additionally, those circumstances are ARE being controlled by others (who have money and privilege) to keep them poor.

Therefore, the only just thing to do is to take money from corporations and people who have it and give it to poor people.

Posted by: RonF at February 11, 2009 04:49 PM

Conflictionist perspective articulated to a T.
Marx would be so proud...except that pesky Central Committee thing doesn't quite solve the problem of total anarchy because the Peepuls bear watching so that they don't steal from each other without CentCom (Central Committee, not Central Command. Sheesh, you are so paranoid!)approval of how much and how often. CentCom is necessary to redistribution of the misery...uh, I mean, wealth. Yeah, that's it!

Posted by: Cricket at February 12, 2009 09:33 AM