Wednesday, July 06, 2011

Politics Versus Reality

Thomas Sowell

It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not.

Not only among politicians, but also among much of the media, and even among some of the public, the quest is not for truth about reality but for talking points that fit a vision or advance an agenda. Some seem to see it as a personal contest about who is best at fencing with words.

The current controversy over whether to deal with our massive national debt by cutting spending, or whether instead to raise tax rates on "the rich," is a classic example of talking points versus reality.

Most of those who favor simply raising tax rates on "the rich" -- or who say that we cannot afford to allow the Bush "tax cuts for the rich" to continue -- show not the slightest interest in the history of what has actually happened when tax rates were raised to high levels on "the rich," as compared to what has actually happened when there have been "tax cuts for the rich."

As far as such people are concerned, those questions have already been settled by their talking points. Why confuse the issue by digging into empirical evidence about what has actually happened when one policy or the other was followed?

The political battles about whether to have high tax rates on people in high income brackets or to instead have "tax cuts for the rich" have been fought out in at least four different administrations in the 20th century -- under Presidents Calvin Coolidge, John F. Kennedy, Ronald Reagan and George W. Bush.

The empirical facts are there, but they mean nothing if people don't look at them, and instead rely on talking points.

The first time this political battle was fought, during the Coolidge administration, the tax-cutters won. The data show that "the rich" supplied less tax revenue to the government when the top income tax rate was 73 percent in 1921 than they supplied after the income tax rate was reduced to 24 percent in 1925.

Because high tax rates can easily be avoided, both then and now, "the rich" were much less affected by high tax rates than was the economy and the people who were looking for jobs. After the Coolidge tax cuts, the increased economic activity led to unemployment rates that ranged from a high of 4.2 percent to a low of 1.8 percent. But that is only a fact about reality -- and, for many, reality has no such appeal as talking points.

The same preference for talking points, and the same lack of interest in digging into the facts about realities, prevails today in discussions of whether to have a government-controlled medical system.

Since there are various countries, such as Canada and Britain, that have the kind of government-controlled medical systems that some Americans advocate, you might think that there would be great interest in the quality of medical care in these countries.

The data are readily available as to how many weeks or months people have to wait to see a primary care physician in such countries, and how many additional weeks or months they have to wait after they are referred to a surgeon or other specialist. There are data on how often their governments allow patients to receive the latest pharmaceutical drugs, as compared to how often Americans use such advanced medications.

But supporters of government medical care show virtually no interest in such realities. Their big talking point is that the life expectancy in the United States is not as long as in those other countries. End of discussion, as far as they are concerned.

They have no interest in the reality that medical care has much less effect on death rates from homicide, obesity, and narcotics addiction than it has on death rates from cancer or other conditions that doctors can do something about. Americans survive various cancers better than people anywhere else. Americans also get to see doctors much sooner for medical treatment in general.

Talking points trump reality in political discussions of many other issues, from gun control to rent control. Reality simply does not have the pizzazz of clever talking points.

No one is more of a master of political talking points than President Barack Obama. Remember "shovel-ready projects"? These were construction projects where the shovels were supposed to start digging the moment the government gave them the "stimulus" money.

Two years later, Obama can joke about the fact that the shovels were not as ready as he thought. In reality, the shovels were never ready. It can take forever to get all the environmental approvals to build anything in today's political and legal climate.

If Obama didn't know that, his advisers surely did. He can treat it as a joke today but it is no joke for those who are saddled with the debts produced by his runaway spending in the name of "shovel-ready projects." Nor is it a joke to the unemployed, who remain unemployed despite all the "stimulus" spending.

The talk about the many "green jobs" created by the government is likewise no joke. Since the government creates no wealth, it can only transfer the wealth required to hire people. Even if the government creates a million jobs, that is not a net increase in jobs, when the money that pays for those jobs is taken from the private sector, which loses that much ability to create private jobs.

Back in the 1930s, Franklin D. Roosevelt's administration hired more young men in the Civilian Conservation Corps than there were in the U.S. Army. But that never brought unemployment down into single digits at any point during that entire decade. As late as the spring of 1939, the unemployment rate was 20 percent.

Government-created jobs did not mean a net increase in jobs then -- or now. But this is only mundane reality. What makes a great political talking point is government coming to the rescue of the unemployed by creating jobs. That talking point helps politicians get reelected, even if it does nothing for the economy in general or for the unemployment rate.

Among the biggest triumphs of talking points over reality are political discussions of rent control and gun control. Rent control supposedly rescues helpless tenants from the high rents charged by "greedy" landlords -- at least in political rhetoric.

But the two cities which have the oldest and strongest rent control laws in the country also have the highest rents -- New York and San Francisco. Yet that plain reality has not made a dent in the thinking, or lack of thinking, of those who support rent control.

Nor are they at all interested in other realities about rent control, whether in these two cities or in other cities around the world. These realities include housing shortages and a reduced supply of maintenance and other auxiliary services, such as heat and hot water.

Other forms of price control likewise lead to shortages, and have for literally thousands of years. But such plain realities do not affect the heady social vision conjured up by talking points.

Far from being discouraged by such realities, those who believe in price control for housing often think price control for medicines and medical care is a great idea too.

We need not speculate as to what effects price controls can have on medicines and medical care because there are already shortages of both in countries where a government-controlled medical system includes price controls.

The talking points about gun control are as far removed from reality as the talking points about rent control. But on this issue, at least, the advocates cite some highly selective statistics to go along with their rhetoric.

Gun control advocates often point out countries like Britain that have stronger gun control laws than ours and lower murder rates. But they totally ignore countries that have stronger gun control laws than ours and higher murder rates than ours.

One such country is right on our border -- Mexico. But there are others farther away, such as Brazil and Russia. There are also countries with higher rates of gun ownership than in the United States -- Switzerland and Israel, for example -- that have much lower murder rates than ours. But none of this has the slightest effect on the talking points of gun control zealots.



Failed Stimulus Spending Erodes America’s International Competitiveness, Wipes Out Wealth

In the Daily Caller, Chris Edwards has an interesting article about why government spending doesn’t “stimulate” the economy over the short-run or the long-run. Rather than growing the economy, stimulus packages are typically wasteful wealth transfers akin to a “leaky bucket,” which harm the economy in the long run, whether or not there are any short-run stimulus effects.

As Edwards notes, “Despite ongoing federal deficits of more than $1 trillion a year, many liberals are calling for more government spending to ‘create jobs.’” But if government spending creates jobs, it’s hard to understand why unemployment has soared, even as government spending has exploded in recent years: “Federal spending has soared over the past decade. As a share of gross domestic product, spending grew from 18 percent in 2001 to 24 percent in 2011.” As he notes, “government spending and taxing creates ‘deadweight losses,’ which result from distortions to working, investment and other activities. The CBO says that deadweight loss estimates ‘range from 20 cents to 60 cents over and above the revenue raised.’ Harvard University’s Martin Feldstein thinks that deadweight losses ‘may exceed one dollar per dollar of revenue raised.’” Due partly to this “leaky-bucket” effect, Texas A&M economist Edgar Browning concluded that “It costs taxpayers $3 to provide a benefit worth $1 to recipients,” and that “today’s welfare state reduces GDP — or average U.S. incomes — by about 25 percent.”

Stimulus spending also will undermine America’s international competitiveness. We wrote earlier about how the stimulus package used taxpayer money to outsource American jobs to foreign countries like China (in the name of promoting “green jobs”) and wiped out jobs in America’s export sector by reducing purchases of American goods in Mexico and Canada.

Edwards points out that recent stimulus spending will undermine America’s international competitiveness in terms of tax rates. As he notes, the recent massive spending increases, if not curtailed, will have to be paid for with equally massive tax increases, wiping out America’s edge over other countries in taxes. “This year, government spending in the United States hit 41 percent of GDP, meaning that more than 4 out of every 10 dollars that we produce is consumed by our federal, state and local governments. We used to have a substantial government size advantage compared to other countries. But . . . while government spending in the United States was about 10 percentage points of GDP smaller than the average . . . in the past, that gap has now shrunk to just 4 points. A number of high-income nations — such as Australia — now have smaller governments than does the United States. This is very troubling because America’s strong growth and high living standards were historically built on our relatively small government. The ongoing surge in federal spending is undoing this competitive advantage that we have enjoyed in the world economy.”

This surge in government spending is projected to continue in the future. “CBO projections show that federal spending will rise by about 10 percentage points of GDP between now and 2035. If that happens, governments in the United States will be grabbing more than half of everything produced in the nation by that year.”

Despite all the “deficit-spending stimulus, U.S. unemployment remains stuck at more than 9 percent and the recovery is very sluggish compared to prior recoveries.” The Obama administration had claimed that “‘multipliers’ from government spending are large, meaning that spending would give a big boost to GDP. But other economists have found that . . . multipliers are actually quite small, meaning that added government spending mainly just displaces private-sector activities. Stanford University economist John Taylor took a detailed look at GDP data over recent years, and he found little evidence of any benefits from the 2009 stimulus bill” even in the short run, while Harvard’s Robert Barro concluded that it will have a harmful effect on the economy due to “future damage caused by higher taxes and debt.”

A recent study by economists Bill Dupor and Timothy Conley found that the 2009 stimulus package has wiped out 550,000 jobs. After reviewing its harmful provisions, Harvard University economist Jeffrey Miron concluded that the stimulus package was designed to reward special-interest “constituencies,” not to boost the economy. The stimulus contained all sorts of welfare. The stimulus was so poorly run that stimulus money wound up going to prisoners and dead people, bridges to nowhere, and useless government buildings.

In pushing the $800 billion stimulus package, Obama cited Congressional Budget Office (CBO) claims that it would save jobs in the short run, while ignoring the CBO’s own finding that the stimulus will actually shrink the economy over the long run, by exploding the national debt and crowding out private investment. Nothing in the CBO’s findings supported Obama’s outlandish claim that the stimulus package was necessary to avert “irreversible decline.”



The Forgotten Founding Document

Every July 4th, America celebrates the signing of the document commonly known as the Declaration of Independence. However, there is another document, adopted a year earlier that, in my opinion, helped lay the foundation for the Declaration of Independence. This document, which contains some of the most moving words ever spoken by Founders, needs to be read and celebrated by every American who still values liberty.

On July 6th, 1775, the Continental Congress adopted: A Declaration by the Representatives of the United Colonies of North-America, Now Met in Congress at Philadelphia, Setting Forth the Causes and Necessity of Their Taking Up Arms.

The following was written by Thomas Jefferson:

“We are reduced to the alternative of chusing an unconditional submission to the tyranny of irritated ministers, or resistance by force.—The latter is our choice—We have counted the cost of this contest, and find nothing so dreadful as voluntary slavery.—Honour, justice, and humanity, forbid us tamely to surrender that freedom which we received from our gallant ancestors, and which our innocent posterity have a right to receive from us. We cannot endure the infamy and guilt of resigning succeeding generations to that wretchedness which inevitably awaits them, if we basely entail hereditary bondage upon them.

Our cause is just. Our union is perfect. Our internal resources are great, and, if necessary, foreign assistance is undoubtedly attainable… With hearts fortified with these animating reflections, we most solemnly, before God and the world, declare, that, exerting the utmost energy of those powers, which our beneficent Creator hath graciously bestowed upon us, the arms we have been compelled by our enemies to assume, we will, in defiance of every hazard, with unabating firmness and perseverence, employ for the preservation of our liberties; being with one mind resolved to die freemen rather than to live slaves.”

During the debates in the Virginia Ratifying Convention of 1788, Patrick Henry stated:

“We are told…that our own representatives Congress will not exercise their powers oppressively; that we shall not enslave ourselves… Who has enslaved France, Spain, Germany, Turkey, and the other countries that groan under tyranny? They have been enslaved by the hands of their own people. If it be so in America, it will be only as it has been every where else.”

Henry was a prophet. Once again government tyranny has raised its ugly head. The people of these united States are being forced to submit to the unconstitutional dictates of judges, politicians, bureaucrats and other government reprobates who are more oppressive than King George.



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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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