Thursday, January 25, 2007


With the Democrats back in power in Congress and with the 2008 election campaign already upon us, you'll be hearing much more about "income inequality." This is a major issue for "progressives" (when you hear that word, think "socialists") like Speaker of the House Nancy Pelosi. Populism is back in fashion.

By populism, I mean the exploitation of the uninformed, angry impulses and unfiltered passions of the masses. That anger and resentment has historically been directed at the usual villains and cardboard stereotypes: bankers, insurance companies, "big pharma" (that means drug companies), agri-business, "the military-industrial complex," free trade, free markets and, of course, "the rich." This mentality feeds on conspiracy theories and simplistic fantasies about the way the world works. It seeks to impale the minority of "haves" on the pitchforks of the more numerous "have nots." When you do the political calculus, it can seem like a seductive winning formula for many politicians.

Complaints of income inequality are nothing new. Will Durant traces its history to ancient Rome. He observes that: "The concentration of wealth is a natural and inevitable result of the concentration of abilities in a minority of men and regularly recurs in history . . . Despotism may for a time retard the concentration; democracy, allowing the most liberty, accelerates it." ....

To be sure, there are some very rich people in America who earn and possess hundreds or thousands of times what poorer people earn or possess. But the poor in this country are only relatively poor. We have no abject poverty. On the contrary, America's "poor" have cars, TVs, appliances, computers, $200 basketball shoes and own their own homes. Their lifestyle would be the envy of most of the world's population.

As long as there's relative wealth, there will always be relative poverty. The only alternative is an impossible one: absolute income and wealth equality. In a market economy like ours, the state of the economy will be never be good enough for some and never bad enough for others. In a dynamic economy, there will always be relative winners and losers. Some industries will be ascendant and others will be in decline. For the vast majority of Americans, today's income disparities are mostly related to differing levels of education and skills of marketable value.

Be wary of misleading economic statistics glibly tossed around by populist politicians. A flood of low-skilled immigrants, many illegal, has had a downward influence on average wages. Increases in nonwage compensation - like employer-provided health insurance or deferred compensation in the form of generous defined-benefit pension plans for government employees - are frequently ignored in the wage data. Then there's the discrepancy between reported incomes and consumption, with consumption data - a much better measure of living standards - showing far less inequality.

Politicians and the U.S. government have long been in the business of redistributing income through progressive taxation (the top 2 percent of Americans pay two-thirds of all income taxes; the bottom 50 percent pay only 3 percent) on the one hand, and transfer payments to the poor and middle class on the other. Remarkably, the official income-distribution figures don't subtract income taxes paid by heavily-burdened net taxpayers. Compounding the distortion, cash transfers and the cornucopia of government services and subsidies obtained by net tax receivers are also ignored. Even though we spend hundreds of billions on this, it's like those benefits don't exist.

Individual incomes are determined objectively in the marketplace. When politicians or labor unions don't like the results, they meddle in people's lives and businesses in pursuit of power while invoking the name of "social justice," today's name for egalitarianism. Excessive concentration of income and wealth can destroy a society politically. We're nowhere near that point. Excessive redistribution of income and wealth - without regard for talent and productivity - can destroy a society economically. That's the more tangible danger.

More here



I have just posted here a review of "America alone" by Mark Steyn. There have been plenty of admiring reviews of the book from conservatives so I thought I would try it out on "Ken", my middle-of-the-road reviewer. I am pleased to see that he thought highly of the book too.

Many readers may have seen the story about a firm called "Discount Floor Mats" refusing to send their product to troops in Iraq. Bloggers kicked up a storm about it (e.g. here) and the offending firm received heaps of condemnatory emails. The employee responsible for the refusal has now apparently been sacked. See here.

There is an appalling story here about the limits placed on the love lives of medical and healthcare personnel in Washington State. You can commit a crime by doing perfectly innocent and normal things.

Black Activists Outraged Over Liberal Merger of Abortion and Civil Rights: "Inclusion of Planned Parenthood in a self-described civil rights coalition has outraged members of the black leadership network Project 21, as Planned Parenthood advocates and provides abortions - particularly in the black community. "How can a civil rights group that claims to support underprivileged blacks embrace an organization created expressly to hasten the demise of black people?" asked Project 21 Chairman Mychal Massie. "People of conscience should be appalled and outraged by this alignment." The Planned Parenthood Federation of America recently became a member of the Leadership Conference on Civil Rights (LCCR), a political coalition of almost 200 groups representing liberal racial, gender, age, disability and religious special interests as well as labor unions. The LCCR is most often known in recent years for its opposition to judicial nominees who adhere to an orginalist interpretation of the Constitution."

CAFE standards lead to lighter, less safe vehicles: "In his State of the Union address, President Bush said: "At the same time, we need to reform and modernize fuel economy [CAFE] standards for cars the way we did for light trucks - and conserve up to eight and a half billion more gallons of gasoline by 2017." "CAFE standards kill," said Amy Ridenour, president of the National Center for Public Policy Research. "In our view, the best way to 'reform and modernize' fuel economy standards is to eliminate them. It is hypocritical, and to some, lethal, for a government that forbids drilling in ANWR to, in the name of energy independence, force families into vehicles that are less safe than they otherwise would be." "In a choice between saving gallons of gas or the lives of some of our fellow Americans," said Ridenour, "we should choose their lives."



"All the worth which the human being possesses, all spiritual reality, he possesses only through the State." -- 19th century German philosopher Georg Wilhelm Friedrich Hegel. Hegel is the most influential philosopher of the Left -- inspiring Karl Marx, the American "Progressives" of the early 20th century and university socialists to this day.

The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialistisch) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party".

R.I.P. Augusto Pinochet. Pinochet deposed a law-defying Marxist President at the express and desperate invitation of the Chilean parliament. He pioneered the free-market reforms which Reagan and Thatcher later unleashed to world-changing effect. That he used far-Leftist methods to suppress far-Leftist violence is reasonable if not ideal. The Leftist view that they should have a monopoly of violence and that others should follow the law is a total absurdity which shows only that their hate overcomes their reason -- Details here and here

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