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Archive for June 27th, 2012

Being a libertarian, I’m used to disappointment. So when something actually goes according to plan, I get very happy.

On that basis, I should be utterly and deliriously overjoyed about my endorsement of Francois Hollande to be President of France.  I wanted him to win, in part because he would engage in statist experiments that would help discredit bad policy.

Well, all my dreams are being fulfilled. Here’s some of a new report in the Wall Street Journal.

French Socialist President François Hollande is set to increase the minimum wage by more than inflation, betting consumers will help revive the country’s stalling economy, while his government levies more taxes on the wealthy and large corporations in a bid to reduce the budget deficit. …The government also is preparing to unveil tax increases to make good on its pledge to reduce the budget deficit to 4.5% of yearly output this year and 3% in 2013. The list includes a new tax on dividends, a new top income-tax bracket of 75% for people earning more than €1 million a year, and increases in the wealth and inheritance taxes.

It’s not terribly surprising that Hollande’s going the fully Monty with higher taxes. Indeed, I’ve already mocked those plans.

But I’m surprised that he’s pushing a higher minimum wage as well, particularly with unemployment already at high levels. This video explains why minimum wages undermine job creation and hurt the less fortunate, but Hollande apparently thinks his plan will stimulate growth.

Other European nations have become more rational and now understand that labor markets need to be more flexible.

The Smic increase and the fiscal plan are in line with Mr. Hollande’s election promises but position France at odds with most other euro-zone nations, which are seeking to keep a lid on labor costs to improve their competitiveness and rein in their budget deficits through spending cuts rather than tax increases.

The comment about “spending cuts” is nonsensical, however. Even though traditionally left-leaning organizations such as the World Bank have concluded that government is far too big in Europe, most governments have imposed huge tax increases. Only the Baltic nations have focused on spending cuts.

As such, we can expect more news like this in France.

In France, economic growth has evaporated, with national statistical office Insee forecasting a further rise in the jobless rate, from 10%. Flag carrier Air France last week said it needs to shed more than 5,000 jobs, around 10% of its workforce, by the end of next year.

The nation’s dwindling productive class, meanwhile, will get even smaller since we’re already seeing evidence that investors and entrepreneurs are going to escape to other nations with less punitive tax regimes.

I joked last month that Obama would never be able to make America as socialist as France, and Hollande is confirming that tongue-in-cheek prediction with his crazy policies.

But I should state that I don’t actually want the French people to suffer. But if they elect bad people who impose bad policy, then I want to make lemonade out of lemons and at least help the rest of the world learn from their mistakes.

As my friend (and soon-to-be American citizen) Veronique de Rugy explained in a video, we don’t want America to become more like France.

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Even though it’s important – particularly in a world with slippery politicians – to define words and terms accurately, I haven’t focused on this issue.

Indeed, a quick search through my archives shows that the only glossary I’ve ever published was this humorous list of financial terms.

And the only dictionary I’ve ever published was this clever example of Republican-to-English humor by a leftist.

Fortunately, Thomas Sowell is taking this issue seriously and he has two columns addressing how certain words are distorted to advance a statist agenda.

Here’s some of what he writes in Part I. He starts with the elastic definition of “racism.”

“Racism” is another term we can expect to hear a lot this election year, especially if the public opinion polls are going against President Barack Obama. Former big-time TV journalist Sam Donaldson and current fledgling CNN host Don Lemon have already proclaimed racism to be the reason for criticisms of Obama, and we can expect more and more other talking heads to say the same thing as the election campaign goes on. The word “racism” is like ketchup. It can be put on practically anything — and demanding evidence makes you a “racist.”

I also like his assessment of “compassion” and “greed.”

In the political language of today, people who want to keep what they have earned are said to be “greedy,” while those who wish to take their earnings from them and give it to others (who will vote for them in return) show “compassion.”

But my favorite from Part I is “hungry.”

A political term that had me baffled for a long time was “the hungry.” Since we all get hungry, it was not obvious to me how you single out some particular segment of the population to refer to as “the hungry.” Eventually, over the years, it finally dawned on me what the distinction was. People who make no provision to feed themselves, but expect others to provide food for them, are those whom politicians and the media refer to as “the hungry.” Those who meet this definition may have money for alcohol, drugs or even various electronic devices. And many of them are overweight. But, if they look to voluntary donations, or money taken from the taxpayers, to provide them with something to eat, then they are “the hungry.” I can remember a time, long ago, when I was hungry in the old-fashioned sense. I was a young fellow out of work, couldn’t find work, fell behind in my room rent — and, when I finally found a job, I had to walk miles to get there, because I couldn’t afford both subway fare and food. But this was back in those “earlier and simpler times” we hear about. I was so naive that I thought it was up to me to go find a job, and to save some money when I did. Even though I knew that Joe DiMaggio was making $100,000 a year — a staggering sum in the money of that time — it never occurred to me that it was up to him to see that I got fed.

Now let’s shift to Part II of Sowell’s glossary, which focuses on the meaning of “access.”

Politicians seem to be forever coming to the rescue of people who have been denied “access” to credit, college or whatever. But what does that mean, concretely? …To take a personal example, Michael Jordan became a basketball star — and a very rich man. I did neither. Was that because I was denied “access” to professional basketball? Anyone who saw me as a teenager trying to play basketball could tell you that I was lucky to hit the back board, much less the basket.

Sowell explains why this debate matters.

When statistics showed that blacks were turned down for conventional mortgage loans at twice the rate of whites, that was the clincher for those saying that “access” was the problem and that racial discrimination was the reason. Since this fit the existing preconceptions in many quarters, what more could you want? Other statistics, however, showed that whites were turned down for conventional mortgage loans at nearly double the rate for Asian Americans. By the very same reasoning, that would suggest that whites were being racially discriminated against by banks that were mostly run by whites. …Statistics on the average credit ratings of people in different racial groups likewise seldom saw the light of day. The average credit ratings of whites were higher than the average credit ratings of blacks, and the average credit ratings of Asian Americans were higher than the average credit ratings of whites. But to lay all these facts before the public and say, “We report, you decide” might well result in the public’s deciding that banks and other financial institutions prefer lending to individuals who were more likely to pay them back.

Fans of Professor Sowell can read more of his work here, here, here, here, hereherehereherehereherehereherehereherehere, and here. And you can see him in action here. A truly gifted public intellectual and (thankfully) a prolific writer.

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