Stephen Moore

Stephen Moore hits one out of the park in the Wall Street Journal in A Fairness Quiz for the President, 2/7/12.

Excerpts:

Is it fair that the richest 1% of Americans pay nearly 40% of all federal income taxes, and the richest 10% pay two-thirds of the tax?

Is it fair that the richest 10% of Americans shoulder a higher share of their country’s income-tax burden than do the richest 10% in every other industrialized nation, including socialist Sweden?

Is it fair that American corporations pay the highest statutory corporate tax rate of all other industrialized nations but Japan, which cuts its rate on April 1?

Is it fair that roughly 88% of political contributions from supposedly impartial network television reporters, producers and other employees in 2008 went to Democrats?

Is it fair that the three counties with America’s highest median family income just happen to be located in the Washington, D.C., metro area?

Is it fair that wind, solar and ethanol producers get billions of dollars of subsidies each year and pay virtually no taxes, while the oil and gas industry—which provides at least 10 times as much energy—pays tens of billions of dollars of taxes while the president complains that it is “subsidized”?

Is it fair that some of Mr. Obama’s largest campaign contributors received federal loan guarantees on their investments in renewable energy projects that went bust?

HKO notes:

This article is so strong that even generous excerpts do not do it justice. Please read the whole thing. Stephen Moore wrote the absolutely perfect ad for the GOP nominee, whoever it is.  If they would put their money behind this message they would win in a landslide.

“I’m in this race because I care about Americans. I’m not concerned about the very poor, we have a safety net there. If it needs repair, I’ll fix it. I’m not concerned about the very rich, they’re doing just fine. I’m concerned about the very heart of America, the 90-95% of Americans that are struggling.”

Mitt is being taken apart for this comment, both by the Democrats and by his Republican opposition.

The Wall Street Journal Editorial staff commented in What Mitt Really Meant:

There’s a half-century of creative conservative thinking on antipoverty transfer programs, and it’s too bad Mr. Romney didn’t mention some of it. One note to strike is about growing dependency on government and its corrosive effect on human dignity. Refundable tax credits, Medicaid, unemployment insurance, food stamps and the like are almost 50% more generous than they were in 2007. That increase is for individual recipients, not the rise in overall spending (which tripled) due to more people caught in the recession.

As these means-tested subsidies phase out, they often lead to very high or even infinite marginal tax rates—i.e., the less well off can lose more than a dollar from the government if they earn an extra dollar. Thus can poverty become a trap. Mr. Romney might have said that his goal is to reduce these dependency rolls over time by removing the disincentives to work as the economy improves.

Mr. Romney’s failures to communicate are common among businessmen and other normal people who have the right instincts but haven’t spent their lives thinking about politics.

HKO comment:

This furor over Mitt’s ‘insensitivity’ is plain BS. It is just noise. Do any of these moral supremacists really believe that Mitt does not care about the poor?  Do they really believes he enjoys firing people, another supported gaffe (totally taken out of context) that had the hyper sensitive media frothing like fish to chum?  These media pundits  jump for joy at comments that when taken out of context and repeated seem to support their distorted view of reality.  But they are so irrelevant to the greater issues that I doubt many viewers share their delight.

Mitt may have been ripe for attack, but the worker with a family of four who makes fifty or sixty thousand dollars, pays his taxes, but still has to shop frugally for his family while he watches grocery carts laden with items  he can not afford paid for with Food Stamp debit cards- they understand Mitt just perfectly.

Neil Cavuto interviewed a woman on his show on 2/2/12 about how humor can be used effectively in campaigns as a retort to criticisms.  Reagan was good at it.  Perhaps Mitt should hire a few comedians.

Mitt may not be your first choice.  It doesn’t matter. Similar attacks will follow whoever the GOP nominates.  And we can lament Mitt’s lack of political sophistication that blinded him to how his every word and phrase can be blown into a political firestorm by an opposition that is far more clueless on how the world really works.  It is far easier to attack the trivial and irrelevant that to face the failures of the current administration.

A few weeks ago I posted an article on the Rebel Yid Facebook Page by local columnist Charles Richardson, Tripping Over Stereotypes.  It addressed a comment from Rick Santorum that assumed that most welfare recipients were black, even in Iowa with a small black population.  It did not brand Santorum as a racist, but addressed some common stereotypes that we often innocently stumble on.

The post received several strong comments.  One reader went on a bit of a racist rant and was blocked, but others made remarks that also caused me some concern.  One reader noted that while minorities were only 3% of the population in Iowa they comprised 15% of the welfare recipients and were thus 5 times more likely to be on welfare.

Some readers stopped following me, claiming I was too liberal.  I have certainly lost followers before but never for that reason.   They may have lent some small credibility to my often challenged claim to be beyond left and right.

In an effort to address the other comments, there are two common fallacies on such statistics. The first is the fallacy of reversal.  If 30% percent of welfare recipients  are minority that does not mean that 30% of minorities are on welfare.  ( the numbers are simply to illustrate the point and are not real.)  In Poland just before WW II,  20% of the small Polish Communist Party was Jewish, but this represented less than 1% of the large Jewish population of Poland- 10% of the population before the holocaust).

These fallacies have enormous implications.  Many American leaders feared opening up the immigration before the war, believing that Jews were largely communist.

This fallacy is common. We have been told that marijuana is a gateway drug to harder drugs because a large percent of heroin users had previously smoked marijuana.  But just because 90% of heroin addicts had previously used pot does not mean that 90% of pot smokers will become heroin addicts.  This same logic could be used to make beer and cigarettes a gateway drug.

The second most common statistical fallacy is that correlation is equivalent to causation.  The correlation of minority status to welfare recipients does not mean that the cause of dependency is the fact of being in a minority.  Whether the assumption is genetic inferiority or social discrimination, the proper research will address the significant number of  other factors that would explain this correlation.

You are more likely to be in poverty if you have dropped out of high school, had a child out of wedlock as a teenager, have been convicted of a crime, use recreational drugs regularly, or are unaffiliated with a church.

If I was to describe two different people:  one was a high school drop out single mother with her first child at 17, and the other was only described as a minority, and you had to guess which one was more likely to be on welfare, you would quickly realize that factors other than minority status may be involved in poverty.

Charles Murray’s new book, Coming Apart, focuses on the white community only to illustrate that the loss of common values is more critical to understanding these social problems  than minority profiling. Bradford Wilcox reviewed the book in the Wall Street Journal in Values Inequality, 1/31/12.

Excerpt:

Focusing on whites to avoid conflating race with class, Mr. Murray contends instead that a large swath of white America—poor and working-class whites, who make up approximately 30% of the white population—is turning away from the core values that have sustained the American experiment. At the same time, the top 20% of the white population has quietly been recovering its cultural moorings after a flirtation with the counterculture in the 1960s and 1970s. Thus, argues Mr. Murray in his elegiac book, the greatest source of inequality in America now is not economic; it is cultural.

Since the 1980s, divorce rates have risen, marital quality has fallen and nonmarital childbearing is skyrocketing among the white lower class. Less than 5% of white college-educated women have children outside of marriage, compared with approximately 40% of white women with just a high-school diploma. The bottom line is that a growing marriage divide now runs through the heart of white America.

Mr. Murray tells similar stories about crime, religion and work. Who would have guessed, for instance, that the white upper class is now much more likely to be found in church on any given Sunday than the white working class? Or that, just before the recession struck, white men in the 30-49 age bracket with a high-school diploma were about four times more likely to have simply stopped looking for work, compared with their college-educated peers? By Mr. Murray’s account, faith and industriousness are in increasingly short supply among working-class whites.

We have a political system that is addicted to race to explain our social problems.  This may be as much of an obstacle to understanding our problem as the stereotypes that remain in our discourse.

Alan Reynolds

Alan Reynolds writes in The Wall Street Journal, Tax Rates, Inequality and the 1%, 12/6/11.

Excerpt:

A recent report from the Congressional Budget Office (CB0) says, “The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007.”

But here’s a question: Why did the report stop at 2007? The CBO didn’t say, although its report briefly acknowledged—in a footnote—that “high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009.”

No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.

The larger truth is that recessions always destroy wealth and small business incomes at the top. Perhaps those who obsess over income shares should welcome stock market crashes and deep recessions because such calamities invariably reduce “inequality.” Of course, the same recessions also increase poverty and unemployment.

The latest cyclical destruction of top incomes has been unusually deep and persistent, because fully 43.7% of top earners’ incomes in 2007 were from capital gains, dividends and interest, with another 17.1% from small business. Since 2007, capital gains on stocks and real estate have often turned to losses, dividends on financial stocks were slashed, interest income nearly disappeared, and many small businesses remain unprofitable.

HKO comments:

Alan Reynolds has written extensively on the data relevant to income distribution. Income and Wealth, written in 2005 is an excellent and very readable explanation of the data and a refutation of many distortions that have been so commonly repeated that they still pose as fact.  You will find posts from his book and subsequent articles throughout this blog by putting his name in the search block.

Wisconsin Governor Scott Walker

The history of unions in the American workforce is wrapped up in their quest for political power.

Originally unions sought equality in the workforce with the holders of the capital that employed them.  Unifying was a natural choice.  But their power devolved because the critical industries that employed them devolved.  Foreign competition put their employers at a growing disadvantage.  New information intensive industries such as Google and Facebook became financial powerhouses with few employees.  Much of this was just natural evolution.

Political pressure to promote unionism often had opposite effects.  Factories relocated to less union friendly states and countries.  Read the New York Times article How the U.S.  Lost Out on iPhone Work.

Excerpt:

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

But unions have also lost ground to enlightened management.  As old-line steel companies, a major source of union workers, faded they were replaced by companies such as Nucor.  Nucor is now the largest American steel producer and mostly nonunion.

As unions lost their grip on American industry they sought to maintain their membership by representing government workers.  This was a radical departure and infected with political repercussions.  FDR opposed this and state and local governments largely forbade union representation until JFK in 1962.

Government unions collect union dues from workers, use the funds to promote strongly pro union political leaders, who further enrich the coffers of the unions. It is a vicious cycle that raises the cost of government at the taxpayers’ expense.

It is no wonder that government pay and benefits have thus outstripped the private sector.  And it is no wonder that states have had to push back on the never-ending growth.  Chris Christie from New Jersey, Mitch Daniels of Indiana have fought hard battles with state unions, but the big battle brewing is Wisconsin Governor Scott Walker’s recall vote.  The state’s unions are trying to remove from the office the governor who sought to reduce their power.  This, hopefully, will be the unions’ Waterloo.

From the Wall Street Journal Stephen Moore writes The Most Important Non-Presidential Election of the Decade, 1/28/12.

Excerpt:
The stakes here “go well beyond who will be governor of Wisconsin,” Mr. Walker explains. The recall’s ultimate objective is to intimidate any official across the country who’s thinking of crossing swords with the empire of teachers and other public-employee unions. “This is about killing reform initiatives in every state in the country,” says Mr. Walker.

In Wisconsin, the evidence is mounting that Mr. Walker hasn’t brought economic Armageddon but financial stability. Last year’s $3 billion deficit is now a $300 million surplus—and it was accomplished without the new taxes that unions favored. “If a business is failing, you don’t raise the prices on your customers,” Mr. Walker scoffs.

HKO comment:

Obama has been the ferocious proponent for unions that they expected when they elected him.  The card check bill (which though proposed was never voted on) was a major job killer and he has sought to accomplish through the NLRB what he was unable to get through Congress.

It will be a long touch fight but Walker, Daniels and Christie are at the forefront.  Public sector unions must go.