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May 19 2012

Income Equality v. Economic Stability

C.M. Phippen

Income inequality has always been a part of the human condition. When men hunted for food for their families, the families of the best hunters always had more to eat than their neighbors. Under dictators and kings, friends and family have comprised the wealthy while most of the rest of humanity under their rule have been peasants, paupers and slaves.

While living in the Czech Republic in the early 1990s, the inequality of Communism was quite clear. When entering a neighborhood of party officials it was obviously different, and erased any confusion over the myth of equality in a system where a few ruled the rest by force.

Today is no different. Individual ability, motivation, education and access to power, especially government power, often differentiate the top strata from the bottom in any society. The question is which of these factors we want most prevalent in our society when success is determined – those indicating merit or those indicating the right government connections, i.e. corruption.

When government is allowed to determine who succeeds and who fails, not only are the least competent often elevated to the top, but the incentives for producing the best product, offering the best service, and meeting the needs of the customer or client become warped. For those who think they already are, I would argue that not only is government already too involved in picking economic winners and losers today, but that the alternative to what we have is substantially worse.

According to a report by the OECD released in 2008, the three countries that have bucked the trend of growing inequality from the mid-1980s through the mid-2000s are Greece, France and Spain. None of these countries are exactly models of fiscal sustainability, and none have been able to create an environment where businesses are encouraged to hire for any reasonable period of time.

In all three countries during the period beginning in the mid-1980s, the rate of unemployment has ranged anywhere from 8 percent all the way up to 25 percent with few exceptions. Crisis rates of unemployment in the US are the norm for these countries.

Greece has generally hovered around 10 percent, while enjoying a multi-year spike now over 20 percent. France has historically been in the 8 – 10 percent range with a few dips below for short periods. Spain has seldom fallen below 10 percent, generally in the 12 – 17 percent range, and has had three climbs to nearly 20 percent within that period.

The report also pointed out that the increased differential in incomes isn’t because the poor and middle-class are becoming poorer, rather it is because the upper class are becoming richer. This would seem to indicate that those societies that are decreasing the gap between rich and poor are generally doing so because the rich aren’t becoming richer and suggests a lack of dynamism, creativity, and vibrancy in those economies, at least when compared to other developed nations.

Beyond the idea of income inequality it is interesting to note that, “the difference between income and wealth disparities is largest in countries with relatively equal distribution of incomes, such as Germany and Sweden.” In countries where the government provides more services and benefits for the lower-income population, while at the same time potentially disincentivizing growth for top wage earners, there remain the largest differences in wealth accumulation.

In other words, those who earn their own money, even while being forced to support large percentages of the population with that money, are still substantially better at saving and investing it than those who are simply given benefits. This has led to a greater disparity in income “from capital: dividends, interest, rent, capital gains and so on.”

Two factors significantly improve one’s chances of living above the poverty line. The first is marriage before children; single-parent households are three times as likely to be poor. This means that other workers in society take the place, financially, of the missing parent, which takes money out of the pockets of families often already struggling to make ends meet. The second is work; households with at least one working adult have very low rates of poverty.

The greater the dependence on government for support and subsidies, the greater will become the gulf between the rich and the poor, as well it should be. It is a consequence of comparing relatively stagnant wealth transfers meant for short-term use to keep people from starving to death with what ought to be dynamic, innovative economic transactions.

The alternative is a quasi-socialist economy that closes the gap between rich and poor just before the whole structure crashes and burns or the government is forced to do what socialist Spanish Prime Minister Jose Luis Rodriguez Zapatero has been doing: drastically cutting spending in order to “avoid bankruptcy.”

Let’s not play the game of the Greeks, 75% of whom want to stay in the Eurozone while at the same time casting 70% of their votes for anti-austerity parties, but rather face what is rather than imagine what can never be.


Oct 11 2011

Elizabeth Warren and the War On Our Way of Life

C.M. Phippen

Elizabeth Warren has made waves by recently announcing that the rich aren’t paying their fair share in taxes and that as part of a “social contract,” they owe the rest of society for the wealth they have accumulated. Social contract, the most recent buzzword of the left, apparently means that if you prosper in this land of relative freedom, then you owe a greater part of your wealth to a government that has apparently granted you the opportunity to be productive by providing you with things they have been given the responsibility to provide for all of us – roads, education, freedom from criminal interference, etc. Apparently, the social contract doesn’t require anything of those who choose to bleed society dry by taking its resources and producing nothing.

A number of years ago I was involved in an organization that dealt with foster-care issues for my state. At one point, those of us involved in this organization were asked to share why we chose to become involved. The most common refrain was a desire to “give back.” My response was nothing of the sort. I don’t do good because of what society has done for me; I choose to do good because of who I am and because I care about the suffering of others. Government has no real power to provide anything beyond what the productive in society produce and pay; not the other way around.

Our greatest gift is to live an honest, constructive life by doing our best to improve ourselves and those around us every day and to work hard to provide for ourselves and our families. The greatest destruction we can wreak is to allow a sense of entitlement to lead us to expect that others owe us a portion of their labors, especially a greater portion than we ourselves are willing to give voluntarily.

Bill Gates’ and Steve Jobs’ innovation increased the productivity of every single human being in every part of the world. What honest person can say with a straight face that they owe you some cash along with the myriad blessings that are ours because they chose to develop and utilize the brilliance of their minds? Using their God-given talents in a way that makes our lives easier and enables us to do things that just a decade or two ago were completely unimaginable is an incredible gift. To be given such a blessing and then respond with, “Well, we [may or may not have] paid taxes that paid for those roads and enabled thousands of individuals to get to work so they could make all of our lives easier, but could you throw in a couple bucks too?” just sounds kind of trashy.

Would we be a better society if those innovate, productive individuals had chosen to sit on the couch watching Oprah, collecting a welfare or disability check? I’m certain Jobs could have applied for and received disability during most of the past decade if he’d chosen that road. According to the thinking of Warren, had he made such a choice he wouldn’t owe us anything. Because of the fact that he instead chose to work hard, developing products that are sought after the world over and allowing phenomenal efficiency and personal enjoyment, he owes us a portion of whatever he makes. The very act of producing something everybody wants is apparently worthy of punishment. Hey, in the old Soviet Union nobody made anything anybody wanted but everybody there had a job; maybe this administration does have a jobs plan after all!


Apr 14 2010

Free Press and Freedom

C.M. Phippen

I recently came across some writings of Robert McChesney, co-founder of Free Press. This was one of the organizations whose lawsuit to allow government intervention in the management of internet networks was struck down last week by the U.S. Appeals Court for the District of Columbia.

Free Press calls itself a nonpartisan organization, and its name would lead us to believe that the organization’s main goal is, well, an open and free press. Who in their right mind could oppose that? That’s why the writings of Robert McChesney are so disturbing. McChesney actually does oppose that.

In the far-left publication, Monthly Review, he writes that “winning battles to reconstruct the media system were a necessary part of a broader process to create a more just society . . .” (and lest we become confused, it doesn’t take much exposure to his writings before one realizes that “just society” means socialist) and, “any serious effort to reform the media system would have to be necessarily part of a revolutionary program to overthrow the capitalist system itself.”

Early last year, in the same publication, he espouses an “enormous class struggle” in order to “eliminate the evils of capitalism and the dangers it poses for the world and its people.” In the end, though, he concludes that “there is no real answer but to remove brick by brick the capitalist system itself, rebuilding the entire society on socialist principles.” He says that the majority of the population will learn this in the course of their struggles for a “more equal, more humane, more collective, and more sustainable world.” If you were confused about just how the left defined those words, now you know – socialist tyranny.

He explains that ” . . . it is the specific responsibility of the left to urge . . . the militant organization of the underlying population . . .” and then adds a list of socialist demands that these individuals should be making on our government, or rather on the productive classes in society (yeah, the 53% who pay federal income taxes.) Further, he says that the entire power structure of US society must be altered in order for this socialist utopia to come to pass, just in case you didn’t understand what he meant by the dismantling of the capitalist system the first time he mentioned it.

Can this guy be any more clear? He’s looking for a socialist revolution and he knows the only way to convince Americans that’s what they need is to control the message by controlling the media. During an interview late last year with Tanner Mirrlees of the Socialist Project, he admitted that ” . . . it will be vastly more difficult to have a revolution” without having made significant changes in the media first.

Are the rest of us just supposed to sit and wait?


Dec 7 2009

The Democrat Party and Socialism

C.M. Phippen

Recently discovered video shows Howard Dean, former chair of the Democratic National Committee, telling a group of people in France that the debate for “the new generations, instead of capitalism or socialism, is we’re gonna have both and then which proportion of each should we have in order to make this all work.” He goes on to say that this is a new innovation from Obama. Link here

Most of us have been reluctant to call Obama socialist, even those of us who know what socialism looks like through first-hand experience. During the campaign and beyond, the word was not only dismissed, but quickly shot down as being out of line. The same way the “lies” and “fishy statements” about healthcare have been dismissed. The same way those who actually want a debate about global warming and the questionable data are shut down by shouts of “denier” and declarations that the debate is over. As far as I can see, the debate on each of these issues has never taken place (Al Gore matching wits with Lord Christopher Monckton, anyone?)

In place of debate, the believers have called names and attempted to blackball and denigrate, as we’ve seen from the alleged emails of leaders in the field of climate science, some of whom are substantially behind the “data” used to “prove” global warming. When that hasn’t worked, as with the healthcare question, they’ve asked for all “fishy” information to be reported to the central authority – the White House; that is, until public uproar interrupted that program.

Unlike the typical favorites in political rhetoric (hatemonger, stupid, bigot), socialist is a term used to identify one who subscribes to a particular set of beliefs and values. Nevertheless, it has been treated as slander. The language has become so co-opted by those who want to control the debate instead of having debate that, unfortunately, confusion reigns.

It appears as though the debate that is finally over is that which questions whether the Democrat party is a party with a socialist bent. Howard Dean was their leader from 2005 until 2009 and claims to have instituted the “permanent campaign,” one whose purpose is to influence policy. Throw that in with the calls coming from the White House to convince members of the National Endowment for the Arts (a federally-funded organization, paid for by you and me) to produce propaganda in support of President Obama’s agenda. Story here. It all makes sense now.

I have never heard Obama, publicly, endorse a socialist agenda (except for all those policies he supports which certainly look like one). According to Howard Dean though, Obama is the author of this new innovation to meld socialism with our existing economic system.

The part very most disturbing is the complete lack of transparency and honesty. I’m just not sure why obfuscation would be necessary if the Democrat party truly believes socialism, to any degree, is ultimately best for our country. Is it because Americans would never stand behind such policies, en masse, if they really knew the basis for the current legislative plans of this administration and its party?

If socialism is a goal of the Democrats, come on out and say it. It’s okay. Then, and only then, can we have a debate about the merits of such a system v. a capitalist system v. a hybrid of the two. I’ll be waiting.