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Where the Money Is

220px-Glenn_Reynolds

from USA Today, Glenn Harlan Reynolds writes Middle-class savings like blood in the Water:

When a government is desperate for cash, it goes after the middle class, because that’s where the money is. Yes, the rich are rich, but the middle class is far more numerous. And this has raised other fears. As McArdle also notes, if 529 plans aren’t sacrosanct, what about Roth IRAs? People have worried for a while that the government might go after retirement accounts as another source of income — to the point that there have even been calls for Congress to make such grabs explicitly off limits. But, ultimately, no one is safe, as what is enacted by one Congress can be repealed by another.

The truth is, in our redistributionist system politicians make their careers mostly by taking money from one group of citizens that won’t vote for them and giving it to another that will. If they run short of money from traditional sources, they’ll look for new revenue wherever they can find it. And if that’s the homes and savings of the middle class, then that’s what they’ll target.

HKO

The hard truth is that there are not enough wealthy to fund the welfare state the progressives want.  Taxes will inevitably hit the middle class, just as they have in Europe. Given that two thirds still feel we are in a recession this is an enormously stupid move, but it remains to be seen if the middle class will accept this.

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Natural, Rare and Necessary

Winston-Churchill

From National Review, Lion to the Last by Larry Arnn:

Excerpts:

Churchill agreed with the socialists, partially, on one issue: He helped invent the social safety net. But he looked for ways to implement it without threatening the free-market system, the liberal nature of the society, the advantage of labor over idleness, and the security of property. Churchill’s social safety net relied chiefly on contributions from the beneficiaries and their employers, who paid money into accounts that they could track. Benefits were limited so as not to undercut work or break the treasury. Understanding that human life would always be imperfect as long as it remained human, he did not preach or attempt utopia. The trials of living, raising a family, and following one’s conscience were essential attributes of a fully human life. Churchill believed that if these activities were socialized, life would fall under dehumanizing tyranny, like Hitler’s Germany and Stalin’s Russia.

He balanced these decisions — often between being popular or speaking truth, for allying with socialists during the war and fighting against them in his campaign, for changing political parties twice in his career — all with the artfulness of action called statesmanship. It required gifts “much rarer than the largest and purest of diamonds,” he said. He believed statesmanship is natural, rare, and necessary; it involves the elevation of capacities inherent in human beings and required for high citizenship. All of us must choose. All of us have ultimate purpose and principles that drive what we do, and all of us face necessities that cut in different directions from each other and from our principles.

The classics teach us that this art of choosing involves an intellectual virtue, prudence, and is best learned by studying those who have the reputation for excellence at it. Those people tend to be statesmen, because the questions of politics involve so many people, so many ultimate questions, and so much risk and opportunity. This is why we study Churchill closely.

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The Biggest Thinking Machine

Switzerland World Economic Forum

From The National Review, Davos’s Destructive Elites-“None of us is as dumb as all of usby Kevin D. Williamson

Conservatives are generally inclined to make a moral case for limited government: that transfers are corrupting, that taxes should be collected only to the extent that they are essential, that regulation is a necessary evil and that as such it should be kept to a minimum. That is generally true and persuasive, but the more important argument is the problem of ignorance. Even if Congress were populated exclusively by saintly super-geniuses, there is only so much that 535 human beings can know and understand. The more that decision-making is centralized in political agencies, or even in elites outside of formal government, the more intensively those decisions will be distorted by ignorance. This is true of market-oriented institutions, too, in the sense that big businesses make big mistakes. One of the lessons of the 2007 financial crisis is that the guys who run the banks do not actually know that much about how banks work, even if they know 100 times what the banking regulators know. Free markets offer a critical, if imperfect and partial, corrective to that in the form of financial losses and business failures, which is why things like cars and computers consistently improve while schools and welfare programs don’t. Big markets with lots of competing buyers and sellers are the biggest thinking machines we have, offering the broadest epistemic horizon that our species has figured out how to achieve.

There is a deep philosophical challenge for progressives in that: Progressives say that they want inclusive social decision-making, but the most radically inclusive process we have for social decision-making is the thing that they generally distrust and often hate: capitalism — or, as our left-leaning friends so often put it, “unfettered” capitalism. And who should decide what sort of fetters are applied to whom? The view from Davos is, unsurprisingly: the people at Davos.

The hypocrisy and material self-indulgence on display at Davos may rankle, but the deeper problem is the unspoken assumption that the sort of people who gather in Davos are the sort of people who have the answers to social problems. Historically speaking, there is little evidence to support that proposition. And that is why conventions like that in Davos end up being so frequently counterproductive. When elites get together to talk about the big issues, the discussion consists mostly of very similar people asking themselves what people like them can do. The answer is: A whole lot less than you think.

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Progressive Inequality

golden gate brindge

The Golden State is now home to 111 billionaires, by far the most of any state. In total, California billionaires personally hold assets worth $485 billion, more than the entire GDP of all but 24 countries in the world.

At the same time, California also suffers the highest poverty rate in the country (adjusted for housing costs)— above 23 percent— and a leviathan welfare state. With roughly 12 percent of the population, California now accounts for roughly one- third of the nation’s welfare recipients. This burgeoning underclass exacerbates the demand for public services, deprives the state of potential taxpayers, and puts enormous pressure on the private- sector middle class to come up with revenue.

from The New Class Conflict by Joel Kotkin

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The Anti Poverty Career

welfare state

From George Will in The National Review, Our Mushrooming Welfare State:

Transfers of benefits to individuals through social-welfare programs have increased from less than one federal dollar in four (24 percent) in 1963 to almost three out of five (59 percent) in 2013. In that half-century, entitlement payments were, Eberstadt says, America’s “fastest growing source of personal income,” growing twice as fast as all other real per-capita personal income. It is probable that this year, a majority of Americans will seek and receive payments.

This is not primarily because of Social Security and Medicare transfers to an aging population. Rather, the growth is overwhelmingly in means-tested entitlements. More than twice as many households receive “anti-poverty” benefits than receive Social Security or Medicare. Between 1983 and 2012, the population increased by almost 83 million — and people accepting means-tested benefits increased by 67 million. So, for every 100-person increase in the population there was an 80-person increase in the recipients of means-tested payments. Food-stamp recipients increased from 19 million to 51 million — more than the combined populations of 24 states.

Eberstadt notes that the structure of U.S. government spending “has been completely overturned within living memory,” resulting in the “remolding of daily life for ordinary Americans under the shadow of the entitlement state.” In two generations, the American family budget has been recast: In 1963, entitlement transfers were less than $1 out of every $15; by 2012, they were more than $1 out of every $6.

Causation works both ways between the rapid increase in family disintegration (from 1964 to 2012, the percentage of children born to unmarried women increased from 7 to 41) and the fact that, Eberstadt says, for many women, children, and even working-age men, “the entitlement state is now the breadwinner of the household.” In the last 50 years, the fraction of civilian men ages 25 to 34 who were neither working nor looking for work approximately quadrupled.