Tuesday, March 17, 2009

The Cause of Poverty

by Jacob G. Hornberger

Liberals are saying that President Obama isn't really a socialist because he doesn't favor complete government ownership and control of everything, which is the strict definition of socialism. Since he "only" favors massive government involvement in some things, such as education, healthcare, mail delivery, transportation, retirement, employment, airports, money, bailouts, subsidies, grants, banks, insurance companies, the stock market, occupations, the drug war, and trade restrictions and immigration controls as well as progressive income taxation and equalization of income - well, according to liberals, all that makes Obama "free enterprise" instead of socialist. I wonder what Fidel Castro, who also favors all those things, would say about that.

Lost in all this debate on whether Obama is a socialist or not is one simple but important point: It is the dead hand of government that is the cause of America's economic woes. That means that the more that Obama does to restore wealth and prosperity to America with his increases in borrowing, spending, and printing money, the worst things are going to get. The situation is akin to someone suffering from arsenic poisoning. He goes to the doctor and asks for an antidote. The doctor prescribes more arsenic.

What liberals, who purport to love the poor, needy, and disadvantaged, fail to recognize is another important point: It is the dead hand of the state that is the cause of poverty. Or to be more precise, it is massive government involvement in economic activity that prevents or inhibits a society from becoming wealthy. Call it socialism, fascism, welfare-statism, central planning, inflationism, wealth equalization, or just massive government involvement in the economy, the fact remains: the heavier the hand of government in people's pocketbooks and business activity, the poorer people will be.

Consider my hometown of Laredo, Texas. It is located adjacent to the Rio Grande. On the other side of the river sits Nuevo Laredo, Mexico. It's actually one great big metropolitan area, separated by a river. Yet, the standard of living of people in Nuevo Laredo is markedly lower than that of those living in Laredo. It's a phenomenon that one cannot help but notice the minute he crosses the border into Nuevo Laredo. People in Nuevo Laredo are a lot poorer than those in Laredo.

I'll bet that most Americans would never ask themselves that simple one-word question that they used to constantly ask when they were children, before they had it drummed out of them in those government-run schools their parents were forced to send them to: "Why?" Why are people in Nuevo Laredo significantly poorer than those in Laredo? After all, if one travels to the American city of St. Louis, he'll find that the standard of living of people in East St. Louis, Illinois, is about the same as that in St. Louis, Missouri. That city is separated by the Mississippi River rather than the Rio Grande. Could that be the difference?

No. The reason that people in Nuevo Laredo are so much poorer than people in Laredo is this: The dead hand of the state is much more prevalent in Mexico than it is in the United States. As bad as things are in the U.S. with respect to taxes, welfare, regulation, inflation, and bureaucracy, they are 1,000 times worse in Mexico. While we have Big Government in the United States, Mexicans have Mega Government.

That's the reason people are poorer in Mexico than they are in the United States. It's also the reason that people in North Korea are poorer than those in Mexico. The dead hand of the state is more prevalent in North Korea than it is in Mexico.

All this should provide a clue for liberals, who are supposedly interested in helping the poor. If one wants to raise standards of living for people, the solution is not to increase taxes, spending, borrowing, and regulation but instead to slash them, such as by abolishing the income tax and the IRS and by completely separating the economy and the state. That's the way to help the poor.

Alas, however, liberals move in precisely the opposite direction - higher taxes, borrowing, spending, welfare, regulation, bailouts, and stimulus plans. Even worse, they continue to force children into those government-run schools where they learn to memorize, regurgitate, and conform to this destructive nonsense rather than learn how to critically analyze and challenge it.



The Economy: Sound After All!

As we noted here, Barack Obama has had to calibrate his position on the economy carefully to achieve a series of political goals. During the Presidential campaign, he said the economy was in dire straits and relentlessly ridiculed John McCain when McCain said the economy was "fundamentally sound." Once he took office, the situation became even graver, as Obama wanted to 1) make the sure the bar was set so low that anything that happens in the next four years will be seen as an improvement, and 2) justify a series of liberal initiatives that have nothing to do with the financial crisis, e.g., socialized medicine and a tax on carbon. ("Never let a crisis go to waste!")

But then the market went into an extended tailspin, and Obama seemed to realize--perhaps for the first time--that words can have non-electoral consequences. So he and his advisers started moderating their bleak view of the economy.

We've now come full circle, as this morning, Christina Romer, Chairman of the President's Council of Economic Advisers, agreed with McCain that the economy is "fundamentally sound." What is most interesting about this is that even the Associated Press couldn't miss the irony:
The economy is fundamentally sound despite the temporary "mess" it's in, the White House said Sunday in the kind of upbeat assessment that Barack Obama had mocked as a presidential candidate. ...

During the fall campaign, Obama relentlessly criticized his Republican opponent, Sen. John McCain, for declaring, "The fundamentals of our economy are strong." Obama's team painted the veteran senator as out of touch and failing to grasp the challenges facing the country.

But on Sunday, that optimistic message came from economic adviser Christina Romer. When asked during an appearance on NBC's "Meet the Press" if the fundamentals of the economy were sound, she replied: "Of course they are sound."

Do you think Obama will apologize to McCain for his conduct during the campaign? No, I don't think so either.




NY: Senate to propose "soak the rich some more" tax scheme: "Democratic leaders in the State Senate will seek income tax increases on at least some affluent New Yorkers and a sales tax increase of a quarter of 1 percent to help balance the state budget, a Senate official with knowledge of the plans said in an interview over the weekend. . The move by Senate Democrats, who have a slim majority, will significantly increase pressure on Gov. David A. Paterson, who has said he would consider raising income taxes only as a last resort and only after the Legislature had agreed to steep cuts in state spending."

Iraq: US troops to stay in insecure areas: "U.S. troops will not be removed from areas of Iraq that are not completely secure or where there is a high probability that attacks could resume after the Americans leave, Iraq's prime minister said Sunday. Nouri al-Maliki said in an interview with The Associated Press that he had told President Barack Obama and other top U.S. officials that any withdrawals `must be done with our approval' and in coordination with the Iraqi government."

Obama to unveil small business proposals: "Amid misgivings over his spending blueprint, President Barack Obama has decided to provide billions of dollars in federal lending aid aimed at struggling small business owners. The broad package of measures to be announced Monday includes $730 million from the stimulus plan that will immediately reduce small-business lending fees and increase the government guarantee on some Small Business Administration loans to 90 percent. The government also will take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president's announcement."

Incredible. After $170 billion US bailout, $100 million in AIG bonuses: "Despite being bailed out with more than $170 billion from the Treasury and Federal Reserve, American International Group is preparing to pay about $100 million in bonuses to executives in the same unit that brought the company to the brink of collapse last year. An official in the Obama administration said yesterday that Treasury Secretary Timothy F. Geithner had called AIG's government-appointed chairman, Edward M. Liddy, on Wednesday and asked that the company renegotiate the bonuses. Administration officials said they had managed to reduce some of the bonuses but had allowed most of them to go forward after the company's chief executive said AIG was contractually obligated to pay them."

Scottish independence referendum: "Scottish Liberal Democrat leader Tavish Scott has demanded the Scottish Government ditches its planned independence referendum. Mr Scott told the SNP to drop the `independence panto' and focus on tackling the recession. At the Scottish Lib Dem conference, he branded the SNP government's planned Referendum Bill a waste of cash."

Nutty Harvard feminism: "Here is a tasty bit of circular reasoning used by a feminist from Harvard's law school, Diane Rosenfeld. Ms. Rosenfeld "teaches" a course on feminist theory. Rosenfeld went up against civil libertarian Nadine Strossen to `discuss' pornography. She says that the students really want to discuss pornography but never `have the space to do it' except, apparently, in her alleged course. She claims, `There's not a good way to talk about it, there's not a forum in which to really talk back to pornography, to the extent that we consider pornography as speech.' Of course, this is rubbish. There have been endless discussions of pornography, endless conferences, forums and debates. There is no shortage of academic article, hysterical feminist diatribes, preachy sermons and energetic defenses of the material. What could Rosenfeld mean when she says no place exists to discuss the topic? In my experience what such comments tend to mean is that the other forums are not entirely controlled by feminist ideologues."


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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" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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