Tuesday, November 22, 2011

Compassionate Liberalism?

By Gary Baker

While viewing and commenting on a different blog today (Enemy of the Republic ((Hi Susan!))) I came across a comment that was amusing, exasperating, and somewhat ironic. It was amusing in how sincere the writer was. It was exasperating in how factually wrong she was. And it was ironic in that a few comments ago I was cautioned about using that particular blogsite as forum for personal view, and then this comes along. So it goes. At any rate, I sent a follow-up comment stating that I would not try to engage her on that site, but that she could come over here if she had any interest in honest discussion. I am eager to see if she will arrive.

The subject of the thread was government neglect of education. The blogger who commented put forth a number of statements regarding the Bush administration and compassionate conservatism. Many of these are worth examining.

She (the commenter) began by telling the story of a sadly depressed area, the city of East St. Louis (ESL). Lest anyone think that I am mocking the poor, please be assured that I am not. I hardly grew up in a well-to-do area or family. I did some research in this area, and it certainly has had its share of hard knocks. What the commenter wrote:

"I live near one of the most disadvantaged areas in the US. It's called East Saint Louis, IL. At least,75% of the people who live there are below the national poverty level. And these people, were forced to live there because they had no other place to go, they were segregated. Their children were not welcome at our schools, with our children....they were the untouchables of our society. ESL has basically been a reservation. "

Back in the 1980's the city was sued and the plaintiff won, after this the city went bankrupt. ... They no longer had any money to pay the garbage collectors, there were bags of trash sitting in back yards, in empty lots, in the streets. There were huge rats everywhere. Of course, there were children living here. Then, the ancient sewer stystem finally began to wear out. There was sewage all over the city, backing up in peoples houses, their basements, coming out of peoples sinks, pooling in the empty lots. The school kept having to be shut down, the sewage was coming out of the sinks in the school kitchens where the children's meals were prepared. Diptheria and hepatitis were major health threats.

And again, I remind you, this was in the late 1980's.

There have many large factories outside the city, one of them being Monsanto. They had been illegally dumping chemicals into the soil for years. The lead level in the soil is way beyond what is considered toxic. No-one cared, these people had no-one to help them. "

(Full Disclosure - Some of the parts of the text above, though reproduced accurately, do not appear in the same order as they were posted on the original thread. I have taken great pains, however, to ensure that the meaning of the words quoted is accurately preserved. For the complete full thread, please go to Enemy of the Republic blogsite.)

This certainly sounds like an impoverished area. For those most part, the facts are uncontested. According to an article in Time on line, the lawsuit was in 1995. It also said that the town used to be integrated, but by 2001 was 98% black. There are other statements, however, that are far less accurate from a historical aspect. For example:

"This was during Reagan's administration and the policies of the administration were what was making this possible."

A review of the history of the area shows that if Monsanto was illegally dumping, then it was the last of a long and illustrious line. The town had been largely a mining town since early in the century. According to PATRICK E. GAUEN, Politics writer for the St. Louis Post-Dispatch, coal was a large part of the economy, as well as aluminum and zinc. This continued from early in the century until after WWII. Considering the methods involved, I think it reasonable to assume that a good deal of the damage had been done before Reagan took the reins of the country. Also, according to the same columnist,

"East St. Louis remains an enigma to most Illinoisans, who know it only through its poverty, corrupt past, outsized crime rate and historical ability to deliver Democratic votes."

In point of fact, the article shows the past of the town as one mired in corruption, gangsterism, drug abuse, prostitution. All of this, and reliably democrat elected officials. I find it very odd through all of this, only a Republican president is singled out for any blame or responsibility. When the commentor brings up Clinton, it is in a far different reference:

"When Clinton became president, he fixed the most immediate problems. The city is still bad but at least there is not garbage and sewage in the streets. The city is actually run by the State of Illinois now. "

If the commenter can offer some bona fide points that Clinton "fixed" I would be happy to examine them. The press that I read gives credit for the limited recovery to revenues that came when a casino located there in the 94-95 time frame.

"There are people who manage to become productive members of society who come from there, most of them join the Military and hope that they don't get blown up while they are over in Iraq, it is their only ticket and they are willing to take the chance. And we say that they don't try?"
As a former veteran myself, I question the ability of the commenter to determine all the motives that people have for joining up. I myself went into service more for training than for patriotism, and I freely admit that. I got the training, and it has helped me to be far more successful than I might have been without it. I, for one, applaud those who take advantage of the opportunity and privilege to serve.

"No child left behind withholds funds from schools that do not meet federal standards. ESL is a perfect illustration of why this program will not help those who need help the most. It shows a lack of insight and understanding of the environments that these children live in and how they can best be helped. It shows a lack of compassion."

Granting funds to schools that take the children, give them no useful skills, and trap them into poverty is not compassion. It is stupid. And again, the schools were lousy before NCLB. The schools are now being held accountable. Parents with students in failing schools now at least have the hope of transferring to someplace better, and taxpayers have the hope that their hard earned money is not thrown down a rathole. This is compassion that works. This is improving people's lives, not offering them a fake smile while you slowly ruin their children's lives.

The commenter also wrote " Get out of your books and take a walk. Talk to people like this, ask them questions, get to know them.....Jesus did.....and he would have never promoted 'compassionate conservatism'. Anyone who thinks he would have must have a different Bible than I do."

Take a look at that Bible again. Christ gave people a chance for success. He fed some people at his sermons. Once. He didn't say "Come back tomorrow for more." He didn't set up government food programs. During his time, the church was the program for the poor, not the government. Families were to take care of each other. The poor were helped through the church if they were unable to work. Those who could work were expect to do so (Check "gleaning" in your concordance.) Yes, we are to be generous, but with our own resources, not with those who we feel "already have enough." Compassionate liberalism gave people generational welfare, several generations without two parents, and an endless cycle of dependency. I never recall Christ pushing people to be dependent on anyone except for God; certainly not government.



Can the Underground Economy Save Europe?

"The growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation."

As the old saying goes, the more expensive you are to fire, the more expensive you are to hire. Nowhere is this more apparent than on the European continent.

Even with the United States' lengthening of unemployment insurance benefits at the wake of this crisis, the benefits for the standard down-on-his-luck American pale in comparison to those of the average European. Upon job separation the average Frenchman can expect to see more than half of his salary extended in the form of unemployment benefits. Many European workers see these benefits extended for two to three years after their termination, with some countries extending benefits indefinitely.

Spells of unemployment are consequently prolonged on the European continent. Strict laws governing the separation of employees from companies (a nice way to say, "You're fired") lower the rate of job separation in these countries. Unfortunately, these laws also decrease the rate of job finding, resulting in the prolonged unemployment durations evident.

This problem of unemployed masses was no more than an unfortunate consequence of a well-developed social-welfare system during the boom years. Government coffers were plush to pay out hefty benefits. As the crisis wears on, this unfortunate side effect is increasingly turning into an oncoming train wreck as government deficits widen and welfare payments strain already tenuous state finances.

Decreasing benefits may be unfortunate to those relying on them, but such cuts are inevitable. Already some countries have enacted measures to try to bring these unsustainable systems closer to sustainability. The retirement age has been extended to reduce social-security payments, and unemployment benefits have been cut. People have responded with protests, trying to maintain the standard of living that they fought so hard to achieve over the past decades. Unfortunately, not all things desirable are feasible — Europe's plush welfare system is a case in point.

Fortunately there is a silver lining. In most European countries, and especially in the crisis-stricken periphery, large underground economies exist. While Spain's official unemployment rate is pegged around 20 percent, a substantial portion of its workers are indeed employed, if only outside official statistics. As I outline in a new collection I've edited, Institutions in Crisis: European Perspectives on the Recession, the underground economies of Europe's periphery provide ample (if not always desirable) opportunities for employment. While the Greek economy has the largest underground estimated at 25.2 percent of GDP, the PIGS countries (Portugal, Italy, Greece, and Spain) average 21.7 percent of their economic activity hidden from the official statistics. For comparison, 14.7 percent of German, and 7.8 percent of American output is estimated to be confined to the underground.

If substantial masses of officially unemployed workers can take solace in knowing that there exist large underground venues for their efforts, we may do well to outline the reasons why this unofficial option exists. Hans Sennholz, in his work The Underground Economy, lists four main categories of underground economy activity:

* that portion evading taxes,

* that portion violating laws or production standards,

* production from transfer beneficiaries barred from otherwise partaking in pecuniary-enhancing activities (welfare recipients for example), and

* production from illegal aliens.

While many people assume that the underground economy consists purely of tax evaders and drug dealers, we see that only two of the categories above allow for these groups. That is not to say that underground workers in the other categories do not evade taxes or sell elicit substances. It is to say that the main reason for their involvement outside of the official economy is neither of those reasons.

Europe's underground economies have seen much growth over the past 30 years, especially since this crisis began. In some ways the growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation. Evidence suggests that industry in at least two of our prime culprits have benefited from the expansion of the underground economy. Growing underground economy employment has allowed Italian and Spanish firms to expand and contract production more easily to market demands.

There is an increased emphasis on reallocating the underground economy into the official one as Europe's crisis progresses. The most commonly advocated method involves more frequent tax audits and heavier fines to incentivize entrepreneurs to report their full incomes to the official authorities. The problem with such a solution is that it ignores the core reason why the underground economy exists — and may very well strengthen its existence.

Entrepreneurs operate in the unofficial economy for two main reasons: taxes make official transactions unprofitable, or regulations make them unfeasible. Threats of increased monetary fines do nothing to alleviate the former reason, while only a reduction in the web of rules and regulations will reduce the latter.

Increased fines and audits will undoubtedly reduce the size of the underground economy. Entrepreneurs, even underground ones, will respond to the increased costs and risks by reducing the scope of their activities. This reduction will not translate into an increase in official market activity. Only by easing the regulatory and tax burden facing entrepreneurs will more of them be willing to operate in the official economy.

Instead of viewing Europe's underground economies as bad things, policy makers would do well to start viewing them for what they are: an important signal that old interventionist policies have failed. If one views large underground economies as inherently bad, one must also deem the policies that breed their existence to be bad.



Big recovery in the Rich Port shows what sensible economic policy looks like

The gridlocked members of the congressional Supercommittee should grab President Barack Obama and decamp to a tropical island. Specifically, they should visit Puerto Rico, where a courageous leader is using free-market reforms to reinvigorate this recently moribund U.S. territory.

"We are clearly pro-growth," says Republican Governor Luis G. Fortuno. "And we do not apologize for that."

Fortuno was inaugurated on January 2, 2009, just 18 days before Obama. Since then, these two officials have marched in opposite directions, with opposite results.

"We were closer to the abyss than most states," Fortuno says. "When I came into office, we were facing not just the worst recession since the '30s, but the worst budget deficit in America, proportionally. We were literally broke. We did not have enough money to meet our first payroll. We had to take out a loan to do that. At that point, my wife asked me if we could ask for a recount."

So, unlike the free-spending Obama, and George W. Bush before him, Fortuno declares: "We cut expenses."

Fortuno gave himself a 10-percent pay cut. He trimmed his agency heads' salaries by 5 percent. That bought him the credibility to chop overall spending by 20 percent. He booted some 20,000 government workers, through attrition as well as layoffs, saving $935 million. (Compare that to Bush-Obama's 11.7 percent hike in federal civilian headcount since the Great Recession began in December 2007 -- excluding temporary Census jobs.) Fortuno has shifted remaining government workers from old-fashioned, statist, defined-benefit pensions to modern, market-friendly, defined-contribution plans.

Ranked No. 51 in 2009, behind each of the United States, in terms of deficit-to-revenue, Puerto Rico now is 15th, with the $3.3 billion deficit Fortuno inherited (44 percent of revenues) now macheteed to $610 million (7.1 percent). Fortuno's reforms, including merging government agencies, led Standard and Poor's to upgrade Puerto Rico's credit rating for the first time in 28 years. S and P, of course, famously downgraded U.S. sovereign debt last August, a historical first. Meanwhile, America's national debt screamed past the $15 trillion mark on Wednesday.

Fortuno has sliced taxes. The corporate tax rate plunged last January 1 from 41 percent to 30 percent, en route to 25 percent in 2014. He cut average individual tax rates by one quarter this year and in half within six years.

"You needed to obtain an average of 28 permits and endorsements to do anything," Fortuno says, regarding regulatory relief. "You had to go to 20-plus different agencies to do that. Today, you go to one agency, and you get your permit there, or you can go to PR.gov, and get it online."

"We have created a better business climate, and it shows," Fortuno explains.

A five-year property-tax holiday and the scrapping of capital gains and death taxes have helped push existing home sales up 35 percent this year (while they fell 7.9 percent on the Mainland) and new home sales soaring 92.2 percent (as they sagged 9.9 percent up north)


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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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