Wednesday, June 12, 2013
The Chilean Miracle Shows that Economic Liberty is the Best Way of Helping Ordinary People
Daniel J. Mitchell
I’m in Vienna, Austria, for the annual European Resource Bank meeting. I had the pleasure last night of listening to Jose Pinera speak about economic reform in Chile, particularly the system of personal retirement accounts.
He shared a chart that conclusively shows why good economic policy makes a difference.
(Bigger image here)
Wow. Look at how much faster the economy has grown since the communists were ousted in 1975 and replaced by a pro-market government.* And the poverty rate has plummeted from 50 percent to 11 percent!
Simply stated, economic reform has been hugely beneficial to poor and middle-class people in Chile. Something to remember as we try to rein in the welfare state in America.
Let’s look at some more data. A couple of years ago, I shared this chart showing how Chile had out-paced Argentina and Venezuela. In other words, Chile’s performance is ultra-impressive, whether examined in isolation or in comparison with other nations in the region.
The reason for all this success is that Chile didn’t just reform its pension system. As you can see from this Economic Freedom of the World data, Chile has made improvements in virtually all areas of public policy.
The nationwide school choice system, for instance, is another example of very beneficial reform.
It’s not quite Hong Kong or Singapore, but Chile is definitely a huge success story.
* The Pinochet government that took power in the 1970s may have been pro-economic liberty, but it also was authoritarian. Fortunately, Chile made a successful and peaceful transition to democracy in the late 1980s and has generally continued on a pro-free market path.
Bush is just as much to blame?
John Ransom replies to a "progressive" who is defending Obama by saying that
You’re a liberal, so even when you are right- like you are now- it’s accidental. So as a public service, let me explain to you, in the simplest terms, what you got right, accidentally.
Certainly the GOP has helped establish a track record of what might be the sorriest 25 years of governing in American history. But it’s because they have supported watered-down versions of the Democrat agenda.
For every frick we have in government, we have another frack on the other side, proposing something equally idiotic.
I mean really: How do you run against each other for president as Mitt Romney and Barack Obama did and pretend like there is that much substance between the two parties at times?
Obama spied, so did Bush. Was Mitt Romney going to stop the NSA spying program? Heck and no.
Obama declared war, as president, without the consent of Congress. Bush waged an unpopular war, which was poorly justified and poorly run.
Obama’s kept GTIMO open, killed American citizens by assassination, which he claims he has the legal authority to do.
George Bush on the other hand opened GITMO as a prisoner of war camp and allowed the torture of enemy combatants, which he claimed that he had the legal authority to do.
But here’s the difference: Bush isn’t some moralizing, Nobel-peace prize-winning, hypocrite wannabe who thinks America’s problem is that he’s not emperor. Obama, on the other hand, is.
If the GOP – and George Bush- made mistakes, they’ve been honest mistakes.
Obama’s nothing but a pile of deceit, stuffed into an empty suit and trumpeted from a teleprompter.
When you allow your president to allow the attorney general to desist from prosecuting one of the most egregious examples of voter intimidation in the last 30 years, it’s not going to end well for you and your party.
And do you know why? Because you pretend that there is some moral virtue that makes progressives better than anyone else.
And you pinned that claim to a guy with many talents, but virtue is not amongst them. You guys have that habit too.
Bill Clinton was even a more talented guy than Barack Obama is; he’s a wretched person, however. And I think his wife is even worse.
I can’t wait to read the new book, she’s writing. From what I hear, it will likely make average Americans cringe. Of course Democrats will treat it like it deserves a Nobel prize in literature.
But here’s the real point for both parties: Our mode of government is inadequate for a period of time when there is more freedom, more equality of access, more people entering the middle class globally than ever before.
What we need is less government interventionism, less Big Brother, not more.
In a period where we have more data to make decisions about how to live our lives, how to best use our talent and how to gain an education that’s right for us, our government is using that technology to limit our choices, to revert to a patristic, feudalism that keeps us trapped in the intellectual remnants of the 19th and 20th century.
What people do with the conflict between technology’s liberating capacity and the desire of government to limit us, well, one day that will be called “The History of the 21st Century.”
God Save The Queen
By Paul Greenberg
Sixty years on the throne of the United Kingdom. Sixty years. Can it have been that long since, even before she was crowned, she was addressing an uncertain nation in her still almost child's voice at Christmas 1952? "You will be keeping it as a holiday," Britain's (very) new monarch told her subjects, "but I want to ask you all, whatever your religion may be, to pray for me on that day -- to pray that God may give me wisdom and strength to carry out the solemn promises I shall be making, and that I may faithfully serve him, and you, all the days of my life." All the days of her life. Even unto now.
Sixty years. And now at 87 a no longer young queen enters Westminster Abbey, this time to hear the Archbishop of Canterbury say a prayer of thanksgiving
Sixty years. She's now the longest-reigning British monarch since Victoria, who celebrated her Diamond Jubilee in 1897 -- yes, that Victoria, "Her Majesty Victoria, by the Grace of God, of the United Kingdom of Great Britain and Ireland Queen, Defender of the Faith, Empress of India." Or, for short, the greatest queen of England not named Elizabeth. Much like Victoria, who witnessed two great prime ministers alternate during her reign (Disraeli and Gladstone), this second Elizabeth has also known two great first ministers, Churchill and Thatcher. And though both served her well, she has served well, too.
Sixty years. She may have inherited a royal crown, but she earned what an ancient sage called the highest of crowns -- the crown of a good name. And in the process gave not only the British monarchy but the whole institution of monarchy a good name, redeeming its history from the likes of George III and her uncle Edward VIII, aka the Duke of Windsor. Which took some doing, not to mention endurance, dedication and just plain longevity.
Sixty years. No one ever confused this Elizabeth with an intellectual, thank God, but she had something far rarer and more valuable than intellectuality: common sense. That, and her respect for the simple proprieties, which is a much underestimated gift in these times, got her and her realm through many a crisis. More good than great, much like her father, good King George VI, she has been a bridge over troubled waters, a constant in ever-changing times. She inherited a kingdom, a nation, an empire that was said to be in decline, but she refused to decline, rising to meet every challenge.
Sixty years on now, may this queen -- and her realm -- be granted many happy, healthy years more. Though the end of her life and reign approaches inevitably, may it still be afar off. But when it arrives, in addition to the joyous ceremonies all through her Jubilee Year, with Her Majesty's permission, allow me to utter one more wish and prayer for her in addition to all those hosannas sung at Westminster Abbey last Tuesday. It comes from the Compline, the service at the end of the day in the incomparable Book of Common Prayer: a peaceful night and a perfect end.
Crushing the Middle Class
Like a carefully memorized religious incantation, politicians and central bankers continually stress how their stimulus policies are designed to promote the interests and prosperity of the middle class. Cynical observers may note that this brave political stance may have something to do with gaining the support of the vast majority of voters who identify themselves as "middle class." However, the cumulative effect of their economic programs has achieved the opposite. The middle class is being crushed under increased taxes, negative real interest rates, debased currencies and increasingly intrusive regulations.
A large and healthy middle class is the single most important bastion of democracy and freedom in the modern world. Individuals who identify with the middle class exhibit strong support of their nation and economic system. A small, weak middle class opens the political door to dictatorial control and tyranny. This was the case in the waning days of czarist Russia when, the small Bolshevik party was able to court the discontent of the underclass to seize control over more than one hundred million people.
Many government policy decisions lead Americans to take on debt, such as Clinton's home ownership push, Bush's post-911 spending prescription, or the tax code's mortgage interest deduction. As the largest debtor in the world, it is not a leap in logic to imagine the U.S. Government prefers policies that favor debtors rather than creditors. These efforts can be magnified if central bank monetary debasement destroys the value of any savings the middle class had managed to save. The explicit policy of the Federal Reserve is now to hold interest rates below the rate of inflation, which by definition discourages saving and encourages debt.In exchange for the loss of their savings, the middle class can't point to any significant gains. Wage rates in America and Europe have been largely flat for several years. In Japan, a similar recession caused a flat economy that has lasted for more than ten years while the broader economy has largely stagnated.
Meanwhile the middle classes are reeling from price increases in many of the areas that are most vital to their lives, such as food and energy. Statistics show that the share of income that Americans must devote to these basics has increased significantly in recent years. In addition, huge new stealth taxes, such as ObamaCare, threaten to dig the hole even deeper. The combination has been a serious reduction in the net disposable income of many consumers in the middle classes. However, even these reduced incomes disqualify many in the middle from government aid programs such as mortgage relief, Medicaid, and food stamps. In short, the middle class is being squeezed between lower net earnings and higher living costs. It's no wonder that many have turned to debt to get by.
Many of those members of the middle class, who have scraped and saved during their working lives, now face serious unemployment, often long-term in nature as old skills become redundant. In retirement, these people live often on fixed incomes. Many who are fearful of recession and the resulting market vulnerabilities of securities have hoarded cash in bank deposits. Today's interest rates manipulated downwards by central banks offer depositors less than half of one percent a year on most deposits. With even 'official' inflation running at just over one percent, bank deposits and short-term financial instruments offer only negative yields. If a more realistic rate of inflation were widely known, almost all fixed instruments, other than those of very high risk, would offer negative real yields.
Finally, the oppressive regulations and aggressive intrusion of today's government are reducing the incentive and raising the costs of starting and continuing in small businesses. In fact, a recent report detailed the increasing difficulties of starting a small business in America. Despite small but steady increases in the overall employment picture, more small businesses are cutting workers rather than bringing on new hires.
In short, the policies of central banks, combined with those of overbearing government, are crushing the middle class and with them the single most important bastion of democracy. Students of history recognize this trend as dangerous. People who believe that society offers no hope of improvement are often willing to enlist in open class warfare and subscribe to the views of dangerous demagogues. Perhaps this is the direction that Washington, Brussels, and Tokyo want to go? We should take great efforts in spreading the word that freedom is good for everyone, not just the rich.
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Posted by JR at 12:42 AM