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Posts Tagged ‘Thomas Sowell’

Over the years, I’ve shared some clever images, jokes, and cartoons to expose the flawed mindset of those who hope to achieve coerced equality of outcomes with redistribution and high tax rates.

The size of a pizza vs the share of a slice.

The modern version of the Little Red Hen.

Washington’s Byzantine welfare state.

Chuck Asay’s overburdened tractor.

A left-wing nursery rhyme.

The Wizard-of-Id parody.

Two pictures showing how the welfare state begins and ends.

A socialist classroom experiment (including a video version).

The economics of redistribution in one image.

As you can see, this is a common-sense issue. When you give people money on the condition that they don’t earn much money, you create a perverse incentive for them to be unproductive.

Especially since, when people work more and earn more, they get hit by a combination of fewer handouts and more taxes. The net result is very high implicit marginal tax rates, in some cases rising above 100 percent.

Needless to say, it’s very foolish to have a welfare state that puts people in this untenable situation where the welfare state becomes a form of economic quicksand.

And it’s also foolish to punish the people who are pulling the wagon with high tax rates and pervasive double taxation of income that is saved and invested.

Russell Jaffe, one of our Cato interns, helpfully cranked out a clever little image showing how redistribution is bad for both those who receive and those who pay.

No wonder the welfare state and War on Poverty have been bad news for both taxpayers and poor people.

And the problem is getting worse, not better.

Let’s begin to wrap up. I shared a Thomas Sowell quote at the beginning to today’s column.

Now let’s read some of his analysis.

He aptly and succinctly summarized why redistribution is a no-win proposition (h/t: Mark Perry).

The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty. …It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth — and that future wealth is less likely to be produced when people see that it is going to be confiscated. …Those who are targeted for confiscation can see the handwriting on the wall, and act accordingly. …We have all heard the old saying that giving a man a fish feeds him only for a day, while teaching him to fish feeds him for a lifetime. Redistributionists give him a fish and leave him dependent on the government for more fish in the future.

So what’s the bottom line?

The simple (and correct) answer is to dismantle the welfare state. State and local governments should be in charge of “means-tested” programs, ideally with much less overall redistribution (a goal even some Scandinavian nations are trying to achieve).

In effect, the goal should be to replicate the success of the Clinton-era welfare reform, but extending the principle to all redistribution programs (Medicaid, food stamps, EITC, etc).

P.S. Some honest leftists admit that the welfare state cripples independence and self reliance.

P.P.S. For those who like comparisons, you can peruse which states provide the biggest handouts and also which nations have the most dependency.

P.P.P.S. To end on a sour note, our tax dollars are being used by the Paris-based OECD to produce junk research that argues more tax-financed redistribution somehow is good for growth.

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Political cartoonists like Michael Ramirez and Chuck Asay are effective because they convey so much with images.

But we need more than clever cartoons if we’re going to educate the general population about how government harms the economy and undermines freedom.

He just turned 83, and let’s hope he has another 20 years of columns to write

And that’s why Thomas Sowell is so invaluable. He’s one of the nation’s top economic thinkers, but he also writes for mass audiences and his columns are masterful combinations of logic and persuasion.

His latest column about poverty is a good example. In this first excerpt, he succinctly explains that official poverty is not the same as destitution.

“Poverty” once had some concrete meaning — not enough food to eat or not enough clothing or shelter to protect you from the elements, for example. Today it means whatever the government bureaucrats, who set up the statistical criteria, choose to make it mean. And they have every incentive to define poverty in a way that includes enough people to justify welfare state spending. Most Americans with incomes below the official poverty level have air-conditioning, television, own a motor vehicle and, far from being hungry, are more likely than other Americans to be overweight. But an arbitrary definition of words and numbers gives them access to the taxpayers’ money.

He then makes a very important point about economic incentives.

Even when they have the potential to become productive members of society, the loss of welfare state benefits if they try to do so is an implicit “tax” on what they would earn that often exceeds the explicit tax on a millionaire. If increasing your income by $10,000 would cause you to lose $15,000 in government benefits, would you do it? In short, the political left’s welfare state makes poverty more comfortable, while penalizing attempts to rise out of poverty.

Since columnists are limited to about 800 words, Sowell doesn’t have leeway to give details, but his explanation of how the government traps people in poverty is the rhetorical version of this amazing chart.

He concludes with some powerful observation about who really benefits from the welfare state.

…the left’s agenda is a disservice to [the poor], as well as to society.  …The agenda of the left — promoting envy and a sense of grievance, while making loud demands for “rights” to what other people have produced — is a pattern that has been widespread in countries around the world. This agenda has seldom lifted the poor out of poverty. But it has lifted the left to positions of power and self-aggrandizement, while they promote policies with socially counterproductive results.

But his main message (similar to this video and illustrated by this chart) is that the welfare state hurts the poor even more than it hurts taxpayers.

P.S. As a big fan of Professor Sowell, I’ve cited his columns more than 20 times. My favorite examples of his writing can be viewed here, here, here, here, here, here, here, here, hereherehereherehereherehereherehereherehere, and here. And you can see him in action here.

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The great Ronald Reagan famously said (and I am paraphrasing, since I do not remember the exact phrase) that the most dangerous words in the English language were “I am from Washington and I am here to help you.”

Those are very wise words, especially when we think of the damage politicians have done because of their impulse to “do something” when the economy stumbles. The problem is not that there is nothing that needs to be fixed. The problem is that the crowd in Washington is far more likely to make things worse rather than better.

And who better to explain this than Thomas Sowell.

Sowell starts his most recent column by explaining that politicians who want to “do something” almost always want to expand the burden of government spending, but he notes that this approach has meant deeper recessions and more economic suffering. And he cites Warren Harding as an example of a President who rejected the notion that bigger government was some sort of economic elixir.

…you might think that the economy requires government intervention to revive and create jobs. It is Beltway dogma that the government has to “do something.” History tells a different story. For the first 150 years of this country’s existence, the federal government felt no great need to “do something” when the economy turned down. Over that long span of time, the economic downturns were neither as deep nor as long lasting as they have been since the federal government decided that it had to “do something” in the wake of the stock market crash of 1929, which set a new precedent. One of the last of the “do nothing” presidents was Warren G. Harding. In 1921, under President Harding, unemployment hit 11.7 percent — higher than it has been under President Obama. Harding did nothing to get the economy stimulated. Far from spending more money to try to “jump start” the economy, President Harding actually reduced government spending.

Can we learn any lessons from Harding’s anti-Keynesian approach? Assuming we want more growth and less unemployment, the answer is yes (and we can also learn the lesson that Hoover was a moronic statist from the very beginning).

President Harding deliberately rejected the urging of his own Secretary of Commerce, Herbert Hoover, to intervene. The 11.7 percent unemployment rate in 1921 fell to 6.7 percent in 1922, and then to 2.4 percent in 1923. It is hard to think of any government intervention in the economy that produced such a sharp and swift reduction in unemployment as was produced by just staying out of the way and letting the economy rebound on its own. Bill Clinton loudly proclaimed to the delegates to the Democratic National Convention that no president could have gotten us out of the recession in just one term. But history shows that the economy rebounded out of a worse unemployment situation in just two years under Harding, who simply let the market revive on its own, as it had done before, time and time again for more than a century.

Allow me to actually quibble with what Sowell wrote. Harding didn’t “let the market revive on its own.” He helped the economy grow faster by shrinking the federal budget. As Jim Powell explained in National Review, “Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922.”

That’s a stunning statistic, akin to cutting more than $1.5 trillion from today’s bloated federal budget.

Sowell  also cites the achievements of the Gipper. Since I’ve posted some powerful comparisons of Reaganomics and Obamanomics, this is music to my ears.

Something similar happened under Ronald Reagan. Unemployment peaked at 9.7 percent early in the Reagan administration. Like Harding and earlier presidents, Reagan did nothing, despite outraged outcries in the media. The economy once again revived on its own. Three years later, unemployment was down to 7.2 percent — and it kept on falling, as the country experienced twenty years of economic growth with low inflation and low unemployment. The Obama party line is that all the bad things are due to what he inherited from Bush, and the few signs of recovery are due to Obama’s policies beginning to pay off. But, if the economy has been rebounding on its own for more than 150 years, the question is why it has been so slow to recover under the Obama administration.

By the way, Sowell also could have mentioned what happened in the United States immediately after World War II. The Keynesians were predicting a return to depression because of big reductions in government spending and the demobilization of millions of troops. But as Richard Vedder and Jason Taylor explained for the Cato Institute, the economy quickly adjusted and rebounded precisely because politicians didn’t revive the New Deal (and, as you can see from this video, President Reagan understood this bit of economic history).

Sowell also explains how FDR made a bad situation worse in the 1930s.

A great myth has grown up that President Franklin D. Roosevelt saved the American economy with his interventions during the Great Depression of the 1930s. But a 2004 economic study concluded that government interventions had prolonged the Great Depression by several years. Obama is repeating policies that failed under FDR.

In previous posts, I have cited both Sowell and the Wall Street Journal to make this very point, but I also call your attention to this post referencing the seminal work of Robert Higgs, as well as this video on the pernicious role of government intervention in the 1930s.

Last but not least, check out this video to understand more about FDR and his malignant views.

P.S. Fans of Professor Sowell can read more of his work here, here, here, here, here, hereherehereherehereherehereherehereherehere, and here. And you can see him in action here.

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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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A couple of years ago, Newt Gingrich accused Obama of being a socialist, causing some squawking and grousing about incivility from the more sensitive types in Washington.

I jumped to the President’s defense, pointing out that Obama is a different type of statist.

I’m gratified that Thomas Sowell of Stanford University’s Hoover Institution agrees with me.

It bothers me a little when conservatives call Barack Obama a “socialist.” He certainly is an enemy of the free market, and wants politicians and bureaucrats to make the fundamental decisions about the economy. But that does not mean that he wants government ownership of the means of production, which has long been a standard definition of socialism. What President Obama has been pushing for, and moving toward, is more insidious: government control of the economy, while leaving ownership in private hands. That way, politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector. Politically, it is heads-I-win when things go right, and tails-you-lose when things go wrong. This is far preferable, from Obama’s point of view, since it gives him a variety of scapegoats for all his failed policies… Thus the Obama administration can arbitrarily force insurance companies to cover the children of their customers until the children are 26 years old. Obviously, this creates favorable publicity for President Obama. But if this and other government edicts cause insurance premiums to rise, then that is something that can be blamed on the “greed” of the insurance companies.

So what is the right technical description of what Obama is proposing? Well, if you allow nominal private property, but impose government control, it’s called fascism. Sowell agrees, and also adds some history for the unenlightened.

One of the reasons why both pro-Obama and anti-Obama observers may be reluctant to see him as fascist is that both tend to accept the prevailing notion that fascism is on the political right, while it is obvious that Obama is on the political left. Back in the 1920s, however, when fascism was a new political development, it was widely — and correctly — regarded as being on the political left. Jonah Goldberg’s great book “Liberal Fascism” cites overwhelming evidence of the fascists’ consistent pursuit of the goals of the left, and of the left’s embrace of the fascists as one of their own during the 1920s.Mussolini, the originator of fascism, was lionized by the left, both in Europe and in America, during the 1920s. Even Hitler, who adopted fascist ideas in the 1920s, was seen by some, including W.E.B. Du Bois, as a man of the left. …What socialism, fascism and other ideologies of the left have in common is an assumption that some very wise people — like themselves — need to take decisions out of the hands of lesser people, like the rest of us, and impose those decisions by government fiat. …Only our own awareness of the huge stakes involved can save us from the rampaging presumptions of our betters, whether they are called socialists or fascists. So long as we buy their heady rhetoric, we are selling our birthright of freedom.

All this being said, I want to reiterate something else that I wrote back in 2010. It is counterproductive to call Obama a fascist because that term is now linked to the specific form of evil produced by Hitler and the National Socialist Party.

So if you disapprove of Obama’s policies, call him a statist or a corporatist. Heck, you can say he believes in cronyism or maybe even collectivism. Those terms get across that he wants more government without causing needless controversy that distracts from the main message.

But make sure you apply the same term to Republicans who impose the same types of policies, such as Bush and Nixon.

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A few days ago, I wrote about Article 1, Section 8, of the Constitution, which lists the “enumerated powers” of the federal government. That post included a reference to Wickard v. Filburn, an infamous Supreme Court case that opened the door to unlimited intervention from Washington.

Why was this case important? As is so often the case, Sowell’s analysis is a model of clarity and common sense.

Thomas Sowell

Roscoe Filburn was an Ohio farmer who grew some wheat to feed his family and some farm animals. But the U.S. Department of Agriculture fined him for growing more wheat than he was allowed to grow under the Agricultural Adjustment Act of 1938, which was passed under Congress’ power to regulate interstate commerce. Filburn pointed out that his wheat wasn’t sold, so that it didn’t enter any commerce, interstate or otherwise. Therefore the federal government had no right to tell him how much wheat he grew on his own farm, and which never left his farm. The Tenth Amendment to the Constitution says that all powers not explicitly given to the federal government belong to the states or to the people. So you might think that Filburn was right. But the Supreme Court said otherwise. Even though the wheat on Filburn’s farm never entered the market, just the fact that “it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market” meant that it affected interstate commerce. So did the fact that the home-grown wheat could potentially enter the market. The implications of this kind of reasoning reached far beyond farmers and wheat. Once it was established that the federal government could regulate not only interstate commerce itself, but anything with any potential effect on interstate commerce, the Tenth Amendment’s limitations on the powers of the federal government virtually disappeared.

So why was this case such a disaster? Sowell continues.

The implications of this kind of reasoning reached far beyond farmers and wheat. Once it was established that the federal government could regulate not only interstate commerce itself, but anything with any potential effect on interstate commerce, the Tenth Amendment’s limitations on the powers of the federal government virtually disappeared. Over the years, “interstate commerce” became magic words to justify almost any expansion of the federal government’s power, in defiance of the Tenth Amendment. That is what the Obama administration is depending on to get today’s Supreme Court to uphold its power to tell people that they have to buy the particular health insurance specified by the federal government.

Sowell identifies the bottom line.

The power to regulate indirect effects is not a slippery slope. It is the disastrous loss of freedom that lies at the bottom of a slippery slope.

Many people have identified Plessy v. Ferguson, which allowed the racist imposition of separate-but-equal policies, as one of the worst decisions in Supreme Court history.

They’re right, but Wickard v. Filburn deserves a place on that list as well, only it enabled statism rather than racism.

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Welcome, Instapundit readers. This school choice video shows the best way of dealing with the problems described in this post (though, as Walter Williams explains, that’s only part of the answer).

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If you care about helping the less fortunate succeed, I’m commenting today on a Thomas Sowell column that will make you sad and angry. It is a story about how powerless and disadvantaged people are being hurt to advance the political interests of some elitists.

Here is the clever way he starts the column. I particularly like the reference to Social Security as a Ponzi scheme, which reminds me of this cartoon.

There have been many frauds of historic proportions — for example, the financial pyramid scheme for which Charles Ponzi was sent to prison in the 1920s, and for which Franklin D. Roosevelt was praised in the 1930s, when he called it Social Security. In our own times, Bernie Madoff’s hoax has made headlines. But the biggest hoax of the past two generations is still going strong — namely, the hoax that statistical differences in outcomes for different groups are due to the way other people treat those groups.

Then he gets to the meat of his topic.

The latest example of this hoax is the joint crusade of the Department of Education and the Department of Justice against schools that discipline black males more often than other students. According to Secretary of Education Arne Duncan, this disparity in punishment violates the “promise” of “equity.” Just who made this promise remains unclear, and why equity should mean equal outcomes despite differences in behavior is even more unclear. This crusade by Attorney General Eric Holder and Secretary of Education Arne Duncan is only the latest in a long line of fraudulent arguments based on statistics. If black males get punished more often than Asian American females, does that mean that it is somebody else’s fault? That it is impossible that black males are behaving differently from Asian American females? Nobody in his right mind believes that. But that is the unspoken premise, without which the punishment statistics prove nothing about “equity.”

Professor Sowell contemplates the motive for this Obama Administration initiative.

What is the purpose or effect of this whole exercise by the Department of Education and the Department of Justice? To help black students or to secure the black vote in an election year by seeming to be coming to the rescue of blacks from white oppression? Among the many serious problems of ghetto schools is the legal difficulty of getting rid of disruptive hoodlums, a mere handful of whom can be enough to destroy the education of a far larger number of other black students — and with it destroy their chances for a better life.

Sowell elaborates further, pulling no punches.

Secretary Duncan and Attorney General Holder want to play the race card in an election year, at the expense of the education of black students. Make no mistake about it, the black students who go to school to get an education are the main victims of the classroom disrupters whom Duncan and Holder are trying to protect. What they are more fundamentally trying to protect are the black votes which are essential for Democrats. For that, blacks must be constantly depicted as under siege from whites, so that Democrats can be seen as their rescuers. Promoting paranoia translates into votes. It is a very cynical political game, despite all the lofty rhetoric used to disguise it. Whether the current generation of black students get a decent education is infinitely more important than whether the current generation of Democratic politicians hang on to their jobs.

Very powerful stuff. And it should be disturbing as well.

I’ve already commented on the implicit racism in the minimum wage law and the reprehensible decision by leftists to put the interests of teacher unions ahead of the interests of black students.

Now we can add something else to the list.

If you like Professor Sowell’s insights, I’ve highlighted more of his work here, here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action here. A truly gifted public intellectual and a (thankfully) prolific writer.

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