Dr. Roy Spencer has a new book out, and I’m happy to give him space on WUWT with a plug for it. Josh of cartoonsbyjosh.com did the cover art. Looks like Roy was funded by “big fire” in writing this book 😉 Anthony
FUNDANOMICS: The Free Market, Simplified
July 4th, 2011by Dr. Roy Spencer
I’m pretty excited that today (Independence Day, 2011) is the release date for my new book, Fundanomics: The Free Market, Simplified.
Our friend, Josh, did the cover art and it perfectly captures one of the book’s main messages: the greatest prosperity for ALL in a society is achieved when people are free to benefit from their good ideas.
In Chapter 1, A Tale of Two Neanderthals, Borgg and Glogg are the tribe’s firestarters, who get the idea to invent firesticks (matches). This leads to a system of trading with a neighboring tribe which has many great hunters, and as a result the inventors’ tribe never goes hungry again.
But the favored treatment the inventors receive from the tribe’s elders later leads to resentment in the tribe, and people forget how much better off they all are than before — even the poorest among them. Technology and prosperity might change, but human nature does not.
Simply put, a successful economy is just people being allowed to provide as much stuff as possible for each other that is needed and wanted. Economics-wise, everything else is details. When we allow politicians and opportunistic economists to fool us into supporting a variety of technical and murky government “fixes” for the economy, we lose sight of the fundamental motivating force which must be preserved for prosperity to exist: Liberty and the pursuit of happiness.
The main role of the government in the economy is help ensure people play fair…and then get out of the way.
I devote each chapter to a common economic myth.
For example, it’s not about money, which has no inherent value and is simply a convenient means of exchange of goods and services that is more efficient than bartering.
It’s not even about “jobs”, because it makes all the difference what is done in those jobs. Many poor countries have a much lower standard of living than ours, yet fuller employment. If we want full employment, just have half the population dig holes in the ground and the other half can fill them up again. The goal is a higher standard of living…not just “jobs”.
And the desire of some for a “more level playing field” and for “spreading the wealth around” is simply pandering to selfishness and laziness. The truth is that most of the wealth has already been spread around, in the form of a higher standard of living. If we do not allow the few talented and risk-taking people among us have at least the hope of personally benefiting in proportion to their good ideas, then economic progress stops.
The good news is that those few talented people need help, which is where most of the rest of us come in. One person with a new idea for a computer cannot design, manufacture, market, distribute, and sell millions of computers to the rest of society. They need our help, and in the process everyone benefits.
I also examine the role of various government economic programs, most of which end up hurting more than helping. A major reason why the government is so prone to failure is the lack of disincentives against failure in government service. In the real marketplace failures are not rewarded, which helps keep us on the right track to prosperity.
Even the truly needy in our country would be better off if we allowed private charitable organizations, rather than inefficient government bureaucracies to compete for the public’s donations.
I’ve been interested in basic economics for the last 25 years, but frustrated by the technical details (marginal costs, money supply, etc.) that too often scare people away from understanding the most basic forces which propel societies to ever high standards of living. Now, with our country facing tough decisions about our financial future, I decided it was time to stop yelling at the idiots on TV (and giving away all my ideas to talk show hosts) and put the material in a short — less than 100 pages — book that would be approachable by anyone.
I’ll be signing the first 500 copies. The price is $12.95 (including free shipping in the U.S.) You can see all of the chapter first pages at Fundanomics.org. I think this book would be especially valuable to homeschoolers.
It is most unfortunate that my finances prevent me from purchasing the next 545 books and sending a copy to each of the members of Congress, the Supreme Court and the President. Only those who read and understand the text would be deemed qualified to hold their present position.
While they may not agree wholeheartedly with every premise, at least they would have removed the blinders which cause them to follow their party dogma without thought.
Happy 4th!
May you be able to remain independent from all of the things that weigh you down and still be surrounded by those you can depend upon.
You are going to release it on Kindle, aren’t you?
The big story going around MSM and clearly they are now blatantly admitting it “no global warming for past 10 years” BBC etc…. will really erode the AGW cause as they have been maintaining that ALL this wild weather is due to recent global warming….. caught lying! They are completely without any credibility. Surely this news should stop the Carbon Tax push in Australia?
Please kindle it and release it internationally.
The “progressives” (talk about a contradiction in terms, that left-wing statists are in favour of “progress?”) in the UK and the EU need to see those simple truths. Not that they would ever recognise them, of course. They still behave like they can borrow their way out of debt and tax the country into prosperity!
Roy,
I did a degree in economics and taught it for 10 years or so. I have enjoyed your forays into economics in earlier books, and remember thinking that your economics is at least as good and probably better than your climatology. I have a lot of trouble believing that there is a greenhouse effect at all. I can not conceive that clouds trap heat. But I would endorse you ideas on economics without reservation.
Governments don’t back winners. They legitimize and institutionalize waste.
As for the US, well, if it were to realize the advantage that it has enjoyed due to the fact that its currency has been accepted as an international means of exchange, and the free ride that accrues to the nation that enjoys that advantage, and that eventually the nation getting the free ride becomes fat and lazy because it is actually ‘undisciplined’ by market forces and you can see where that is heading. Ultimately, its best if we all….yes, all of us, earn our keep.
For as long as there have productive humans, there have been parasites (those along for a free ride). Unfortunately, given our swollen Western Governments, the revolving door between banking and government and needless organizations like the EU and UN, the parasites are now even larger than the host.
A most unhealthy situation that cannot last. We definitely need to get back to Fundanomics.
So Dr Spencer is a closet economist!
The ideas are excellent and the publication of Dr Spencer’s book is timely indeed. One of the aftershocks of the financial crisis, has been the myth that ‘capitalism has failed,’ and if we had but more regulation, everything would be so much better (a myth ruthlessly demolished by Thomas E Woods in his book ‘Rollback’).
Yet another myth is that we must all rejoice in the ‘green jobs’ that expensive renewable technologies are supposed to create. As Fundanomics explains, it is not about jobs per se, but about the quality of those jobs. Jobs that are unproductive are by definition low paid. A society of low paid albeit full employment is impoverished.
It is really obvious when you think about it, but sometimes, the obvious just needs to be said.
The book is correct, of course; but it is sad, even shameful, that these realities have to be written down to this level for people (hopefully) to understand. But if that’s the case then let the book be a tremendous success so we can survive for a little longer. Unless the free market principles are embraced quickly we will have the same situation as Greece recently has had.
This kindle thing does not a massive and well-appointed library make. There is something precious about the cover and pages of a book. You want to feel its textures and lay eyes on its print, in very real ways, over and over again. A kindle just doesn’t have a feel of permanency to me. I would most likely end up buying both. A download for my kindle, and the actual book.
Just ordered “Pamela”, the first book Benjamin Franklin published in America. I have read it. Want to own it. I requested an interlibrary loan and actually read a 75 year old copy several years ago. I would give anything to have such a copy. For now, a cheap knockoff will have to suffice.
“But the favored treatment the inventors receive from the tribe’s elders later leads to resentment in the tribe…”
Sounds like the society that demonized its own scientists for warning about human caused climate change. Such a shame. When will we ever learn?
This is my main problem (I didn’t say my only problem) with Michael Moore’s take on capitalism. In it’s basic form, capitalism is just people trading goods / services / expertise / currency etc to others for their goods / services etc. And government’s only job should be to ensure that a fair playing field exists, and the consumer is protected from unscrupulous providers. It’s true that there are lots of examples where companies get so big and influential that they don’t play by the rules any more. And this is what Moore always focuses on, in his relentless drive to prove capitalism is evil. Maybe, in some future utopia where there is plenty for all, socialism might become the way people live their lives, with true altruism for everyone. But in today’s real world, where selfishness, scarcity, greed, and jealousy actually exist, socialists fail to see that their grand vision is guaranteed to result in sloth, envy, and all sorts of other unattractive human behaviors. If we, as a species, ever hope to reach that mythical utopia, then the only way we’re going to get there is to allow and encourage the bravest, boldest, and smartest amongst us to reach for that brass ring.
“One person with a new idea for a computer cannot design, manufacture, market, distribute, and sell millions of computers to the rest of society. They need our help, and in the process everyone benefits.”
With the ongoing attack on our patent system under the guise of “streamlining”, the government / inventor relationship is being destroyed. The ramifications of the changes will cripple small inventors and make it impossible for them to succeed.
Example.
Changes from:
First to invent
To:
First to publish
Now it’s possible for the inventor to be cut out completely!
Gary says
The people you refer to would not read this book if it was written for 1st grade children. They are too busy watching American Idol or such and and cashing in their unemployment check or similar and living off working people. The number of these types that vote for politicians that continue this type of theft is rising due to bad immigration policies and corrupt politicians supporting “distribute the wealth” policies. Sorry-I’m frustrated.
The US government is currently subsidizing ethanol production in the US, while blocking Brazilian imports of lower cost ethanol. This raises costs in the US for both corn and ethanol, which hurt US industries and consumers that depend on these products, making the US less competitive in the world market.
While it can be argued that this is wrong, the elected officials are simply doing what is in their best interests, contrary to the larger interests of the people of the US. This process is repeated time and time again, and the economy becomes less and less efficient with each government intervention.
Pamela Gray says:
July 5, 2011 at 6:51 am
This kindle thing does not a massive and well-appointed library make. There is something precious about the cover and pages of a book.
——————————————————————————————————————–
I agree. I am not anti-technology, but there is something to be said for traditional artifacts. I felt a bit of a loss when they took the card catalogues out of the libraries…
“Simply put, a successful economy is just people being allowed to provide as much stuff as possible for each other that is needed and wanted.”
The problem we face today is that governments are telling us what we should want and need.
Grizzled Bear says:
July 5, 2011 at 6:59 am
The only way that big companies can ever be a problem, is when they have the backing of govt.
Mike says:
July 5, 2011 at 6:55 am
Why shouldn’t scientists who lied in order to enrich themselves be punished?
Roy is a hero in climatology, but his economic advice is unwise. Making money from an invention is no more reliable than aiming to win the lottery or to be a rich rock star. The real money in invention goes to the marketers and patent poolers.
The old way of reaching financial security is vastly more reliable and vastly more available.
Live simply and cheaply, work steadily, save, save, save.
Just ordered a copy. After reading it myself, I plan to make my kids read it. I’ve been looking for something a little more accessible to kids than Economics in One Lesson. Hopefully this will be it.
But, Dr. Spencer doesn’t really believe Neanderthals existed, does he?
Mike says “Sounds like the society that demonized its own scientists for warning about human caused climate change. Such a shame. When will we ever learn?”
Mike, you have completely misunderstood the point of the book. Inventors improve the world by making it more efficient. Gobal warming alarmists are trying to make the world less efficient by making energy much more expensive. More expensive energy will inevitably increase poverty worldwide.
Thank you Dr. Spencer and Josh! You are becoming a fantastic homeschooling resource.
Roy Spencer
Thank you! Book ordered.
Go for it, Dr. Spencer, that’s what our nature dictates and our Constitution protects – trade!
Only a Totalitarian or a Parrot would think that “History is Class Warfare.” Given their apparently inherent fixation upon wealth appropriation and “redistribution”, to themselves, they should know! But I’d say it’s more to the basic point involving the inherent differences between the individualistic vs the Totalitarian mind to instead think of History as trade, and thus the increasing creation and redistribution of wealth between individuals or businesses which are rightfully interested in benefiting themselves and – therefore necessarily and for their mutual benefit – the people who want to trade with them. All of which presupposes the astounding creativity of the human mind, along with its desire to be free and its desire to actually create wealth as proven, another thing which Totalitarians or “Statists” either can’t comprehend, or fear even as an existential threat to themselves which then extends at the least to our “equal” enslavement and poverty as their idea of “progress”.
Progressives are Totalitarian Slavers, pure and simple. That’s their “history” and their idea of “wealth creation”, “justice”, and the same final meaning of the rest of their similarly misappropriated verbiage.
I wish people would actually read Adam Smith instead of just quoting a sentence here and there. A large part of his The Wealth of Nations is devoted to the argument that governments should spend heavily on public works because the free market is not suitable for meeting those needs. Clearly, he had a deep and nuanced understanding of what markets were all about, and he famously derided the merchant class as rapacious, dishonest and a pack of fraudsters.
So, economic liberty, yes. But what exactly does that mean, and for whom?
Happy productive people who love to create things of value to others and love to do this not alone but more effectively in self-selected groups whose member’s talents compliment one another, that such groups are known as corporations, and that the extraneous reward for proud and ambitious participation in such a group is most often a life in which free association with beautiful (highly fertile) women becomes the lot of male members whereas looking beautiful the lot of female members, eventually leading to the bright eyed love of happy and not impoverished children and grandchildren.
I run a sole proprietorship. Alas, I am not yet a corporation, and much of the reason is the lack of appreciation our current government-by-the-people affords small business since ironically, us creative workaholics have allowed an ill winded miserable miscreants and Enron worthy corporations and billionaires to convince youth and minorities that white is black, and all that is fine and good is a pile of poo.
Miserable men want to change human nature, specifically female human nature, since, well, “dude, smart and well adjusted hot chicks dig creative rich guys who run corporations!” That the level of unequal income distribution is much the same under fully communist anti-corporate governments is a fact that eludes their practical consideration, for they are idealists, not realists, utopians, not good drinking buddies.
Here’s a test to see if you can spot attention-demanding player hater “alarmists” vs. healthy skeptics.
[Please double-check the link provided. Robt]
I vote for a Kindle version, too!
Then again, there’s nothing like a hand-illuminated scroll and the smell of molding parchment…sigh.
“At the time of earthquakes, all physicists become seismologists, and at the time of economic crisis all scientists become economists” , is my opinion.
It is true that the US is hampered by government regulations that put spokes on the free market running, even though it is the most free market economy in the world.BUT, and it is a big BUT.
Absolutely free world markets without checks and balances turn into a feudal system, not a democracy. The world economy is at the robber baron stage where pirates became nobles and nobles became pirates looting the rest of the “uncivilized” world. We are at the second robber baron manifestation because outsourcing and the internet have been insidiously turning western societies into service economies, polishing each other’s nails and giving haircuts. The few in control of the multinational companies are reaping huge profits and the middle class is squeezed out of existence. There is a limit to what those very rich can spend their money within the country to keep an economy going for a healthy middle class. How many cars and yachts and mansions do they need? It is the middle class that sustains an economy, and it is dying.
Even for Greece, the sovietization of its economy, a 40% dependence on government posts and civil service salaries, the road to hell was oiled with outsourcing all it manufacturing to far and near cheaper countries. Free markets after all. The local repercussions though were enormous with a lot of people on the dole and pressure on politicians to find them jobs.
I think that the US problem is outsourcing, not its bureaucracy and its subsidies, although they may be a part of the problem. There should be checks and balances in the globalised framework of free markets, which do not exist. And who needs a world government?
Mike says:
July 5, 2011 at 6:55 am
“But the favored treatment the inventors receive from the tribe’s elders later leads to resentment in the tribe…”
Sounds like the society that demonized its own scientists for warning about human caused climate change. Such a shame. When will we ever learn?
Mike, the “scientists” of which you speak have most obviously demonized themselves, and they continue to do so even as we speak! But then I suppose you also think that the Islamofascists and the radical Islamist nations have not demonized themselves, but have instead been “unfairly” victimized by America and Israel?
Listen up, Mike. The question you need to face is if and when you will ever learn! It’s your own mind, after all, which you should be primarily interested in, right? Instead of simply parroting the usual anti-intellectual Totalitarian memes and verbiage?
Unfortunately –
There are a few parameters that are slightly different in the 21st century than in Borgg’s and Glogg’s Neanderthal era. For example – a few more people. Not to mention that the Neanderthal’s did a number on megafauna with all that free-market hunting – – which was O.K. because saber-toothed tigers can make life short for Fido.
Fact is – there hasn’t been a pure “free market” since about the time of Glogg and Borgg because of the simple fact of environmental limits. Whether that is the number of woolly mammoths or the amount of fertile farm land along the Nile in Ancient Egypt. Now, these limits can be addressed by crude Malthusianism or by a club over the head of your neighbor. But, short of that, you need to develop some sort of mechanism to address the reality of limited resources.
Money is insufficient since no medium has universal value. (You can’t eat gold.) Nor does money have much value short of an ordered political system. Thus, governments are instituted among humans with all of their political and priestly castes. And they have been doing this since the days of Gilgamesh.
Hello?
PS – Isn’t this a weather blog?
I am always happy to see a new book by Roy Spencer. This one sounds like the Bible of Free Market Capitalism. Good. We need it. The virtues of Free Markets are no longer taught in our schools and have been replaced by multiculturalism, the stealth version of Marxism.
Roy Spencer, a man of many parts. He is certainly in good company as there are certain similarities to a book by Peter Schiff, investment broker.
Government should limit its role to Defence of the Realm and Law and Order issues and little else.
What a wonderful world it would be if Government was mandated to spend no more than it raised in tax and even better if a yearly referendum was needed to pass the budget. That would be democracy. (see Richard North’s EUReferendum blog)
polistra says:
July 5, 2011 at 7:57 am
“The old way of reaching financial security is vastly more reliable and vastly more available.
Live simply and cheaply, work steadily, save, save, save.”
Only if you want to depend on someone else (your boss) letting you keep your job long enough (no security there); only if you do not aspire to better things for you and your family (living simple and cheap); only if your savings are not swallowed up by inflation (no security there either).
That is why so many are finding it very difficult these days.
Your idea of “financial security” is what has been preached to workers for generations by those at the top because they need workers who will settle for less and are afraid to strike out on their own. Perhaps a thorough reading of “Rich Dad, Poor Dad” will enlighten you.
1) Is Dr. Spencer really qualified? I mean, how would it be if a railroad engineer or astrophysicist became involved in climate science?
2) Is it peer-reviewed?
Dr T G Watkins says:
July 5, 2011 at 8:50 am
“What a wonderful world it would be if Government was mandated to spend no more than it raised in tax and even better if a yearly referendum was needed to pass the budget. That would be democracy.”
If government was mandated to spend no more than it raised in tax. it would simply keep raising the tax. The problem with a balanced budget amendment is that without spending limits the law to balance the budget will always be the excuse to raise taxes. It is spending that must be limited as a percentage of GDP.
While a yearly referendum and democracy sounds good on paper, as soon as the majority learn they can vote themselves the minority’s money and possessions they will do so, under the guise of “democracy” of course.
Karl Marx is reported to have said:
Democracy will last only until the people learn that the can vote themselves money from the government.
If so, it may be the only thing he was right about and the Donks are the ones who will prove it.
I have ordered five copies of the Good Doctor’s book. One for my library, one for a family of home-schoolers that I know and one for my son. The other two are for Donks in my family. I suspect that there is no point because, for those people, “words of wisdom are like pearls cast before the swine”. But, I have to try.
Regards,
Steamboat Jack (Jon Jewett’s evil twin.)
PS
If you were to offer the book on Kindle, please set the price so that you receive a suitable profit. It’s your work, you created it, and you deserve a profit. I believe that the split is 75% author and 25% Amazon (pls correct me if I’m wrong.) Seems more than fair!
Hate to throw warm water on your parade, but …
Warming Ocean Layers Will Undermine Polar Ice Sheets, Climate Models Show
ScienceDaily (July 4, 2011) — Warming of the ocean’s subsurface layers will melt underwater portions of the Greenland and Antarctic ice sheets faster than previously thought, according to new University of Arizona-led research. Such melting would increase the sea level more than already projected.
http://www.sciencedaily.com/releases/2011/07/110703133838.htm
On the other hand maybe we just go a ‘shout them down,’ you know just rant and rave that they are using models … as if there was a branch of science that doesn’t use models.
Thanks for the kind words everyone, and especially for Anthony covering something that is a little “off-topic” (except that global warming would be a non-issue if not for the ramifications to prosperity.)
Note that the book website has the first page of each chapter posted…those might answer a few questions posed here.
This book is self-published…my book agent said since I’m not an economist, it would be difficult to get a publisher interested in it. But if I’m “feeling it”, she encouraged me to publish it myself and maybe a publisher would get interested. I think Kindle would need to wait till then. It’s not even on Amazon.
This really has been a labor of love and passion for the subject, and I’ve had the benefit of running the ideas the book contains by economists and other movers and shakers over the years.
-Roy
I just ordered a copy of the book. It’s a good bet that it will be a great read.
But I have to say that anna v is absolutely right. International “free trade” has been awful for the US. I’d argue that it’s unconstitutional, in that the original constitution allowed import/export taxes only. Now those have been largely done away with, in favor of income taxes (in part by the highly dubious16th amendment). The original idea in the constitution is that we would protect our own tribe, and enjoy free trade within our own national borders. This makes eminent sense, as we are a tribe and we do need borders. Modern RINOS and progressive socialist liberals think we do not need borders. Fools.
We’ll have to read the book to find out what Roy has to say about all this.
Humans are endowed with two great urges: to be fruitful, and to multiply. We want to be fruitful, to make a difference, to be significant, to work, to create and be creative. One can learn this from the Bible, or from life and history. Capitalism works because it allows people to be fruitful, to be what we are by nature.
Marxism/socialism/progressivism always fails because it fights against our natural urges. It tries to turn humans into some sort of hive mentality, busy bees with centralized control by a few queen bees. These models have never worked and will never work because they reject our nature. Government handouts likewise eventually destroy not raise up, because they disincentivize the desire to be fruitful while appealing to greed and sloth. People who are poor need work not money. Give them money long enough and it will destroy them.
Go Dr. Roy!
Of course, it will have to be measured against “Tom Swift and His Incredible Bread Machine.”
Economics and climatology seem to be a natural fit. I became intensely interested in both about 6 years ago. I started reading Hayek, Mises, Friedman and Sowell about the same time I started reading Michaels, Singer, Spencer, etc. Both are inexact sciences. Neither discipline can predict anything accurately with their computer models. Both have opposing, dichotomous points of view. The Keynesians are just as absolutely wrong as the AGW alarmists (and our current administration subscribes to both). Socialism and centralized government control always seem to be the “solution” to the “problem” of global warming. The free market is the wisest decision maker there is. Government intervention with the taxpayers’ money have given us such economically non-viable boondoggles as wind farms, solar farms and ethanol as a gasoline adulterant.
I find it astounding that Dr. Spencer, in his professional capacity, doesn’t teach. He’s purely a researcher. He may not be aware of it, but he is an excellent teacher. I’d like to see him write a book about global warming written for about a 9th grade reading comprehension with lots of pictures and simple diagrams. It would be great for schools to add balance to their AGW propaganda and as an added bonus it would be comprehensible by members of Congress.
Economics has been corrupted as a science for political purposes. We read about how our government is subsidizing big oil and the opposite is true. Exxon made 2.9 billion in America the first quarter and paid 3.6 billion in taxes. Exxon did earn 8 billion outside the US and paid appropriate taxes in the other countries. The global warming movement is corrupted science and the economics trade is being corrupted.
anna v says:
July 5, 2011 at 8:32 am
I don’t see how it could be possible for you to be any more wrong. Please spend some time educating yourself as to what a service sector job is. It is not limited to burger flippers and nail polishers. In the world of economics there are two classifications for work. Manufacturing and service. If you aren’t spending your time actually building something, then you are part of the service sector.
Lawyers, accountants, consultants, programmers, etc. Are all part of the service sector.
To be a little more precise, your job classification is actually defined by what your company does. An accountant who works for an automobile manufacturer is considered part of the manufacturing sector. Spin that division out into a newly formed company, and he magically goes from manufacturing to service, even though he is doing the same job, at the same desk, for the same manager.
It is a lie that the middle class is being squeezed out of existence. The middle class is healthy and growing. At least it was until the Obama recession came along.
As to outsourcing, once again you couldn’t be further from the truth. Outsourcing does not destroy jobs. Yes, a measure of the work that was once done in this country is now done outside this country. The result of this is two fold. Internally, this makes products less expensive. The people who save money on these less expensive products (that includes you anna) are better off. It also means they have money left over to spend on other things that they want. Increased purchasing of these other things means increased employment in those areas.
Externally, the people newly employed in other countries now have some money to spend. Which they do. Eventually, every penny sent overseas will make it’s way back to the US in the form of either purchases or investment. Both of which create jobs here in the US.
Outsourcing does not destroy jobs, it moves them around.
Johnny Gunn says:
July 5, 2011 at 8:35 am
There is no such thing as a limited resource, so long as human ingenuity is not constrained.
Did the British economy grind to a halt when the forests started to run out? Of course not, they found a new source of energy.
Did the world’s economy grind to a halt when whale oil became scarce? Of course not, they found new sources of oil.
Malthus was wrong, a fact that even he admitted just a few decades after his famous book.
Is there a need for some kind of authority to adjudicate when two entities both want to use the same resource? Of course. But that is a far cry from declaring that we need govt to divy up scarce resources.
Tom in Florida says:
July 5, 2011 at 9:12 am
The balanced budget ammendment currently before congress has spending capped at either 15% or 18% (I forget which) of GDP. Of course it has no chance of passing.
Mike says:
July 5, 2011 at 9:42 am
Climate Models Show
—
Thanks for disproving yourself. Come back when you have actual data.
Jerry says:
July 5, 2011 at 9:50 am
International “free trade” has been awful for the US.
—
International trade is what has made this country rich. I’m willing to bet that you think that manufacturing in this country has been destroyed. You would be wrong. There is more manufacturing in this country today, than there has been at any time in our history. What has decreased is manufacturing employment. Workers have been replaced by machines. However, this is a good thing. 200 years ago, 95% of Americans worked on farms. The total is now about 1%. Was this transition a bad thing? Of course not. And neither is the continued automation of the manufacturing sector. New work will always be found, so long as govt doesn’t muck up the workings of the economy.
Dr. Spencer:
As a self-published book, have you considered an electronic book? Publication costs are much lower and both Barnes and Noble and Amazon let you easily sell self-published ebooks.
My sister self-published a hard-cover book and has never recovered the publication and distribution costs.
@johnny Gunn
July 5, 2011 at 8:35 am
“[…]
PS – Isn’t this a weather blog?”,
================================
Read the very first line under the Blog name.
I am a homeschooler and this book will be on my must purchase list for the start of school this fall.
I do not know where Dr. Spencer now calls home, probably Huntville, but I am going to claim him as a “Hometown boy makes good.” for us folks in the UP of Michigan. Go Soo Blue Devils.
Dr. Spencer:
Reminds me of the Russian joke: “So long as the bosses pretend to pay us, we will pretend to work.”
Maybe your work will be like the book Freakonomics which was very successful and a great read.
Mark Wilson says:
July 5, 2011 at 10:26 am
Maybe I should have put “sarcasm on” and “sarcasm off” on the haircuts and manicure.
I would be interested to see links that show that offshoring industry created more jobs in the US.
Also links on manufacturing. I have the impression that the US is only manufacturing arms related products, which matches the continuous wars. Even there thought, much electronics is outsourced, from what I have read.
Also links on the health of the middle class in the recent years. You think that the recession is a sign of affluence?
Mark Wilson says:
July 5, 2011 at 10:26 am
Maybe I should have put “sarcasm on” and “sarcasm off” on the haircuts and manicure.
I would be interested to see links that show that offshoring industry created more jobs in the US.
Also links on manufacturing. I have the impression that the US is only manufacturing arms related products, which matches the continuous wars. Even there though, much electronics is outsourced, from what I have read.
Also links on the health of the middle class in the recent years. You think that the recession is a sign of affluence?
Grizzled Bear says:
In it’s basic form, capitalism is just people trading goods / services / expertise / currency etc to others for their goods / services etc.
Leave out the currency part, and you have described just about any society. WIth that part, it could be socialist, communist, capitalist, whatever. All societies trade. Capitalism stands for a social system with a particular way of producing goods and making them available for trade, as well as for a particular relationship between the state and civil society.
Things have moved on a bit since the18th century days of sole proprietorships. And as Polyani argued in The Great Transformation, those days of liberal/capitalist dominance were large engineered by the state. A ‘free’ market didn’t just spring up from enthusiastic individuals.
History may be bunk as the great anti-intellectual bigot Henry Ford called it, but it’s worth knowing a little of it anyway.
Self publishing it about as far from peer review as you can get.
I think the cover art nails it. No such thing as a free market since neolithic times.
Sounds attractive, If the book is good, including that Roy Spencer’s values are sound, I’ll publicize it to 19,000 friends (many who have blogs).
(I have to add the qualification about values as I do not know much of the author and do find some skeptics have particular ideologies that undermine their views of economics.)
Certainly is a need for step-through efforts, I’ve done that on monopolies including rebutting the “level playing field” line, in http://www.keithsketchley.com/monopol3.htm.
I’ve heard of one or two other books that try to give a simple explanation either by example or step-through, one title is “The Incredible Bread Machine” by Susan Love Brown but I have not got my hands on a copy yet.
You realize of course that you can do both. You can have a steady job that pays for the family, and work towards creative endeavors that can bring you extra money on the side. In the rare case you may achieve wealth if the fruits of your creativity become very popular. I’m not sure why it seems necessary to tell people they should put blinders on, lock-in on some long-term job stability and constant saving to achieve a proper retirement. That is quite narrow-minded and likely foolish advice. This is particularly ironic on such a site as this that is frequented by Willis E and his well-practiced motto, “Retire Early, Retire Often.”
Mike, self-publishing is not ‘as far from peer review as you can get’. Showing up at WUWT to troll about talking up models of polar seas melting the ice and pretending that scientists raising the alarm about human-caused ‘global warming’ are being ‘demonized’ is the epitome of remoteness from peer review. Oh…those were your contributions. Sorry.
You show up here to chip in, then everyone, anyone, even children, counter your silly or baseless comments. I am not sure who is in your peer group is, but consider this ‘reviewing your work’. (Read any papers lately? I recall that I and others recommended that you do some actual reading to learn a bit about the subjects before commenting.)
But seriously! I mean, ‘warm water…’?! Read the ARGO papers; read the satellite papers; at least read the thermometer. Do not read the models. They are always hot. That is why we call them ‘models’. They promote what their creators think should be fashionable. Watch some Fashion TV. Learn. What most models promote, no matter how hot, is nearly always wrong, wrong, wrong.
uh oh – here comes a competitor with something bigger, cheaper, funnier more convenient and way more sophisticated:
http://reocities.com/Athens/Aegean/1835/kandide.html
written by a pirate so no copyrot, all rites reversed. all expenses were paid by virtue of the amount of life generously given to its creation. the cost to you is what nature hath requir’d- the amount of your life given to reading it. basic economics.
patent and copyright monopolies have stifled innovation and criminalized competition.
feel free by violating them. visit your local library. 🙂
@Tom in florida:
to rely on somebody else to provide the place to work, the tools and materials, all means and goals plus instructions – that is not manly, independent, or liberated.
if you have chosen utter dependence, you will take what is given and like it. if you want different, be a natural man and make your own gig.
jobs are for children; steps on the way to adulthood.
having a boss is not far removed from staying at home and obeying daddy.
it’s always somebody else in charge of your life, isn’t it? do you see a pattern?
and why you may never have a good master? because the owner (was you) has defaulted, abandoned responsibility, and strives to be serf to a wiser, more benevolent master, not himself.
While I respect Spencer I think this book is high on idealism and low on reality.
History shows time and time again that when income disparity between the upper and lower quintile exceeds 1000% a popular revolt is imminent. In the United States in 1947 it was 400%. It’s about 600% today. No one, rich or poor, is well served by excessive concentration of wealth. In saner times like the 1950’s and 1960’s the top marginal tax bracket was 70% or more. Today upper 5% of income earners are bitching up a storm because they might be subjected to an increase in top marginal rate from 36% to 40% as the supposedly temporary Bush tax cuts are extended ad infinitum past their expiration date last year.
There are two basic problems confronting us. Rampant inefficient ever expanding government spending coupled with a political incapacity to actually collect enough revenue to support the spending. Future liabilities have been growing at an unsustainable rate for decades. We really need to get back to the progressive tax structure of the 1950’s and 1960’s at least long enough to get the books balanced again and we really need to reign in spending, big time, like we’ve never done before. This notion that the free market will do this of its own accord is pie-in-the-sky and that’s the pie Spencer seems to be offering up in this book.
There’s boneheaded liberalism and there’s boneheaded conservatism too. We appear to be stuck with nothing but boneheads of one kind or the other taking turns running the country. In both cases they’re both just taking turns running it into the ground.
Roy, I tend to agree with many of your points. However, without a level playing field people can become wealthy through manipulation and abuse rather than invention. There is a long history in America of those who’ve used either politicians or political power in this way. I intensely respect those whose ideas make our lives better. I have nothing but contempt for those who achieve the same results by making others poorer. When you cast things as simply envy of the “well-to-do” you do not distinguish between these two paths. This becomes a variation on “the end justifies the means”, IMHO.
PaulID says:
July 5, 2011 at 11:21 am
“I am a homeschooler and this book will be on my must purchase list for the start of school this fall.”
I just finished homeschooling my third and last child who graduated right on time with her non-home schooled peers. My previous homeschooled child graduated a year early and entered college a year early and the one before that graduated on time but already had a thriving computer business going when he graduated. None were homeschooled longer than two or three years (10th, 11th, and 12th grades).
The big difference is my children were completed grades 10, 11, and 12 in a single year and so we had two years for something else constructive to occupy their time. The last one really loves working with animals and so while her peers were struggling with finding the time to complete ancilliary public education garbage courses and commuting and social issues like having the right clothes and makeup and membership in cliques mine was enrolled in a two year apprenticeship program for professional dog trainers and in October when the next certification exam is given will be the youngest certified dog trainer in the United States for about 6 months. Now THAT’s what I call successful home schooling. Getting the education you want and need to be happy and successful and not wasting time with things you don’t need and don’t want is my idea of what education should be about. In reality public education, especially at the higher grade levels, is about forcing all students through the same politically correct indoctrination mold. Screw that. I’m SO glad to have lived in Texas where you can pull your kid out of school whenever you want and no one really cares why or how you propose to finish their education yourself. .
Anyhow, I wouldn’t make anyone waste time with Spencer’s “economic” diatribe if there were any possible way to avoid it. Given it isn’t likely to become a best seller in any category avoiding it is as easy as falling off a log.
anna v says:
July 5, 2011 at 11:49 am
Try any site that specializes in economics. While the US does manufacture a lot of arms, it’s only a few percent of total manufacture. The fact that you believe that most US manufacture is in weapons just goes to show how biased your sources are.
I just watched the movie “John Q” with Denzel Washington. It was blatant propaganda. But, what most struck me, was thinking about the effect government run health care would have on all the people working so hard to get that dead organ donor life-flighted to an ER capable of harvesting the heart and then transporting it across a vast country to the boy who needed it. While Obamacare might guarantee the boy a right to transplant surgery without insurance hassles (replaced by endless government red tape), I doubt that enough economic incentive would be left to actually get many hearts to where they were needed. Everybody could feel good about the system where every one was equal regardless of means. But, in the end, we’d all be worse off and those with means will just be jetting to wherever it is that all the doctors have gone (somewhere in the Caribbean would be my guess).
I am driven by envy of course of anyone who has an idea.
http://youtu.be/ur5fGSBsfq8
I can’t open the first pages link for some reason.
Jeremy says:
July 5, 2011 at 12:56 pm
“I’m not sure why it seems necessary to tell people they should put blinders on, lock-in on some long-term job stability and constant saving to achieve a proper retirement. That is quite narrow-minded and likely foolish advice.”
It used to be sound advice and for protestants a religious imperative to live below your means and reinvest the difference. Protestants didn’t invent capitalism but as far as I know they were the first to make a religion out of it and did so centuries ago during the Protestant Reformation. The printing press really turned the tide. Some rebellious churchgoers figured hey, we don’t have to be rich to have our own copies of the bible and don’t need an expensive overbearing church and clerics to tell us what it says. So they started reading the bible at home themselves and in small groups and with the time and energy saved were able to start their own businesses and by living humbly as the bible suggests keep reinvesting the windfall. I suppose you could call that home bible schooling.
Living below your means is always advisable. Couple that with finding things to do with spare time that is both productive and enjoyable is the next most advisable thing IMO. It’s hard to go wrong on that path. Great expectations go hand in hand with great disappointment so caution is advised. But there’s more than a grain of truth in “all work and no play makes Jack a dull boy” so the key is finding work that’s as enjoyable as play and have no expectations about it beyond leading a happy productive life. There’s nothing terribly wrong of course in shooting for the stars through something like writing the next great best selling novel or the next “killer app” for personal computers and things of that nature but one should be advised that there’s ten flops for every success and life is too short to accomodate ten flops so you’d better enjoy the hunt and not be terribly disappointed if each hunt doesn’t end in glory.
At any rate I know far more people who eventually became financially independent through a strong work ethic and living below their means than I know people who spend faster than they earn. The former path is still the surest way to financial independence but it takes 20-30 years and that’s a tough pill to swallow in post-modern US culture where “Let’s party like it’s 1999” is so popular. This attitude has prevailed for a few decades in the federal governmetn where they been partying with borrowed money like there will never be a time when the bill comes due. If you dance to the music you have to pay the piper.
Dr. Spencer,
I will read it.
Perhaps it will take a place in my bookcase next to my dog-eared copy Henry Hazlitt’s short book “Economics in One Lesson”.
John
Lichanos says:
Things have moved on a bit since the18th century days of sole proprietorships. And as Polyani argued in The Great Transformation, those days of liberal/capitalist dominance were large engineered by the state. A ‘free’ market didn’t just spring up from enthusiastic individuals.
Forgive me if I read you wrong, but surely you’re not suggesting that ‘free’ markets were only invented in the 18th century? Try telling that to the 12th century smithy who provided his skills and toil in exchange for food stuffs, or protection by the local nobles. I’m sure Blogg and Glogg would also disagree. Sorry, Bud, but the first ‘free’ markets did exactly spring up from enthusiastic individuals. As Spencer puts it “A society is lifted out of poverty by a free people developing new ways to provide more goods and services people want, with less effort.” The state didn’t event the press; Gutenberg did. The state didn’t invent the light bulb; Edison did. The state didn’t start distributing tools in my area that I can use in my factory; the new sales representative hired to service my city by the national manufacturing company did. The state didn’t open the small corner store at the end of my block; the immigrant family from India did.
The theories of Polyani? OMG! What else would we expect of some pseudo-intellectual socialist? In my experience (of which there is plenty), show me a sociologist / economist with a pet theory on “how things really are”, and I’ll probably be looking at someone who’s willing to suborn reality in order to fit his pet theories. Kinda reminds me of several (in)famous individuals that are discussed on this blog quite frequently. And, honestly, a discussion of some obscure effete-intellectual couldn’t be more boring. If you haven’t noticed, the economies that have been founded on theories of social equality or social justice have mostly been left in the dustbin of history. Only a few select totalitarian regimes remain. And as soon as Fidal kicks the bucket, there will be one less. Forget about theory. That’s reality. Maybe, just maybe, mankind might one day truly reach that socialist utopia. But it won’t be in any of our lifetimes. And it won’t be because of the ‘state’. It will be because the human condition has improved to the point that want and need are no longer an issue.
From the few pages made available at Fundanomics.org, I agree with Spencer’s basic point that individuals are the ones who are best at deciding what’s best for themselves. As he writes, his book’s central theme, which he does not believe has been emphasized enough in books on basic economics is that “The most fundamental motivating force for prosperity is people being allowed to provide as much stuff for each other as they want and need” with Freedom being the foundation. In other words, the message to government, bureaucrats, technocrats, or any other ‘elite’ who thinks they know what’s best for all of us, is to get outta my way. Screw ‘the state’. To that, I say Hear Hear!
With respect, these ideas are widely discredited by reality. History shows a progressive tax structure brings in less tax for many reasons, not the least of which is the wealthiest have the easiest means to pack up and leave, taking their wealth with them.
You’re on absolutely the wrong track talking about tax rates. If you want to increase tax revenues, lower the rates. A broad, flat and low tax system is the way to maximize revenue. That’s why Russia adopted a flat tax years ago.
You’re also wrong about the so-called ‘Bush tax cuts’ as those cuts made the tax system more progressive, not less, by taking millions of Americans off the income tax roles. Again, history shows 2007 as the year of record tax revenues.
anna v says:
July 5, 2011 at 11:49 am
Mark Wilson says:
July 5, 2011 at 10:26 am
Maybe I should have put “sarcasm on” and “sarcasm off” on the haircuts and manicure.
I would be interested to see links that show that offshoring industry created more jobs in the US.
Also links on manufacturing. I have the impression that the US is only manufacturing arms related products, which matches the continuous wars. Even there though, much electronics is outsourced, from what I have read.
Also links on the health of the middle class in the recent years. You think that the recession is a sign of affluence?
One hardly knows where to begin but. judging by this comment thread, it would seem safe to conclude that the conventional wisdom on economic mythologies makes the “consensus” view of the climate look like flinty eyed realism
Your semi sarcastic reference to haircuts and manicures, brings to mind the fact that those “checks and balances” that you seem so enamored of, have most recently been expressed in a dramatic expansion of the number of jobs that are now subject to governmental licensing requirements, now literally tens of thousands, with the only check being on competition and the balance tipped heavily in favor of incumbents, with invisible benefits for consumers but highly elevated costs. This, of course, should not be surprising since the Nobel Prize for Economics some years ago went to a guy, whose name escapes me at the moment, whose life work fairly thoroughly demonstrated that governmental regulatory schemes inevitably devolve into protecting the corporations they were meant to regulate from the vagaries of the market.
Regarding your questions about outsourcing. There was a large study released a while back which dealt with 2500 U.S. corporations who operated in the global economy over a period of close to a decade in the 00s. The upshot of it was that for every job they outsourced overseas they created two jobs in the U.S. In terms of technology, there is also a piece which discusses the breakdown of where the benefits $400 price of an IPhone end up, Much more than half stay in the US to pay for design, engineering, and marketing. China, whose Made in tag is on each one, garners six bucks and change for providing the final assembly.
The US is still by far the largest manufacturer in the world. Our manufacturing sector by itself would be the 8th largest economy on the planet. Our annual man. output equals or exceeds the combined output of the BRIC(Brazil, Russia, India, and China) countries.
I got most of this from economist Mark Perry’s blog and I could have gone back to provide direct links to each of these stories, but I think you would benefit greatly from some time spent searching through his archives for them, As the nun’s at my old Catholic school always said, you’ll learn more if you look it up yourself.
http://mjperry.blogspot.com/
Mark did a WSJ op-ed on this topic which provides a nice overview
http://spruce.flint.umich.edu/%7Emjperry/MPerry_WSJ_TheTruthAboutUSManufacturing.pdf
The blog list on his sidebar provides links to many other valuable resources of economic info.
I trust the book is not simplistic as to assume all Government = bad/wasteful, all companies = efficient. I hear the plaintive cries from those in big corporations all the time that their bureaucracies are far worse than ours. It is simply in the nature of big organisations to accommodate a lot of “fat” which needs a recession to trim, at least in the case of corporations. You probably need the threat of an economy-busting debt default to trim the fat in bureaucracies… see Greece right now.
Personally I have a moderate view… there is clearly a role for Government, but the fact that a certain “type” (and I am not really that type, despite working for State Government) is attracted to working there is related to the working conditions at the lower levels and political influence at the upper levels.
I am the first to admit that there is rarely any disincentive for mediocre or poor performance in Government, just as there is very little incentive to perform well. Promotions (just as in larger organisations) may well be performance-based at the lower levels, but are all based on networking ability at higher levels.
I do support the basic premise that the Government’s role should be minimalist in the sense that they should not interefere in things that ain’t broke. Also, there are many rational economic policy advisors in Government… the problem is when pragmatic policies reach heavily-lobbied politicians. By the time the policies have been mangled by the process, something that might have been beneficial invariably ends up favouring some vested business interest and often at the expense of other businesses or society as a whole. Some systems of Government are more prone to such influence than others.
Micro is simple… most economic debate lies in the macro field, which to my simple mind is very much akin to climate science. There are a lot of influences within an economy, most of which we understand at the individual level, but holistically form a frightfully complex system. Some economists waft outputs from modelling (GCE models for example) about as if they have some meaning, but anyone who has studied econometrics in moderate depth knows that you can show just about anything with a complex economic model.
“What would you like the result to be?” … sound familiar?
“Now, with our country facing tough decisions about our financial future, I decided it was time to stop yelling at the idiots on TV (and giving away all my ideas to talk show hosts) and put the material in a short — less than 100 pages — book that would be approachable by anyone.”
“If we do not allow the few talented and risk-taking people among us have at least the hope of personally benefiting in proportion to their good ideas, then economic progress stops.”
These two lines seem to be sending a very mixed message, ie:
1) “I was inspired to do this because it is important”
2) “Talented people are inspired by personal monetary gain.”
Of course it is never black-and-white, but there are MANY motives besides personal benefit. I am sure Dr Spencer will enjoy spending hit royalty checks, but I also doubt that is a key reason he undertook this project.
Mark Wilson: Have you not noticed that the US is bankrupt? Have you not noticed that China, essentially a communist dictatorship, is thriving? Sure, free trade “just moves the jobs around.” Ok, agreed. Well I have news for you: it also moves a lot of other things around, too. Like wealth, innovation, military might, and the ability to pay taxes, to name just a few.
Those manufacturing jobs rightfully ought to be here, in the USA, where they were first created, where the products were first invented, where our borders are protected by US armed forces paid for by US workers, where tax laws should favor domestic manufacturing, and where foreign competition ought to be taxed out of existence by effective import/export trade barriers. Where the jobs physically are matters greatly. That’s where the middle class will be. That’s where a skilled and ethical “can do” workforce will be. That’s where new ideas to improve the manufacturing processes ideas will be. That’s where new ideas for new products will come from. That’s were kids will grow up knowing how to build things and fix things. That’s where the middle class will thrive. Where do you want to live?
The so-called “free trade” that you describe would make sense, and might even be ethical, if we were trading with a country that had similar laws, the same or similar fundamental rights for her citizens, the same value of currency, similar wages, no barriers whatsoever on either side, and a similar culture. In such a case, sure, take down the trade barriers, as they are not very effective, anyway. Otherwise, leave them in place! And certainly, we have absolutely no business whatsoever trading with communist countries who are actively building up a military trained to destroy us.
Want proof? Drive around Ohio. It was once a jewel, one of our most productive manufacturing states, but no more. It’s dead now, a sad shadow of it’s former self. It’s almost unrecognizable to someone of my generation. And it was not a natural death or natural shift of manufacturing–it was deliberately killed by NAFTA. Millions there are now out of work, or working lousy jobs in the service sector. The middle class there is almost gone. Yes, kids there still have cell phones and ipods, but they don’t know how to make them or how to make the parts that go into them, let alone repair them–but the Chinese kids whose parents work in ipod factories sure do!
The nonsense you spout is typical MBA-with-a-PC pablum. It’s just theory, and it’s not at all relevant to the real world. Real economics, like climate, is a highly nonlinear complex system. It is far more complex than your silly models, and is full of unintended consequences and moral hazards. If your model were even a little bit right, our economy would be thriving. Instead we are bankrupt, owned by, and living on credit from, a communist country. It’s a disgrace. And it’s demeaning to a once proud, productive, and free people.
The founding fathers had it right: free trade within and between the united states, no income taxes whatsoever, severe punitive trade barriers to keep out foreign competition and fund the federal government, strict protection of intellectual property, etc. It worked wonderfully for about 175 years. Then the MBAs took over.
Dave Springer says:
July 5, 2011 at 2:08 pm
I take it that you think Keynes is right in his economic theory, and for that I feel bad for you but I in my admittedly limited knowledge of economics feel that Dr. Spencer has hit the nail right on the head and I would like my children to learn economics from this book first then from reading F.A. Hayek.
@Grizzled Bear
…‘free’ markets were only invented in the 18th century? Try telling that to the 12th century smithy who provided his skills and toil in exchange for food stuffs, or protection by the local nobles
That 12th century smithy was a member of a guild (or he’d be run out of town, or worse) and the prices he charged were set by local regulation. That’s if he could set his prices. More likely, the noble asked him for whatever he wanted and the smithy complied because it was a condition of his being allowed to live there, and he was not allowed to settle anywhere else. And so on and on…That’s feudalism for ya’
Interestingly, that doesn’t work. Receipts amount to about 19.5% of GNP regardless of the tax rates. Raise the rates, and GNP falls, and you get 19.5% of a lower number. Lower the rates, and GNP rises, and you get 19.5% of a higher number.
Pick one.
I have been looking for the exact source of this wonderful quote forever. There are attributions to Benjamin Franklin, Alexis de Tocqueville, Alexander Tytler. Even Wikipedia is on the case …
I doubt it is Marx and you know why? Because it is true. It may be the truest apocryphal wisdom ever uttered. It is practically a description of what happens when the cancer of Socialism is introduced into a healthy free society. It contains the entire gameplan of the Democratic Socialist party masquerading as both Santa Claus and Robin Hood, we can call it Santa Hood. Personally I would not be surprised if it were uttered by Madison or even Hamilton in the Federalist Papers era though it would seem likely that the source would have turned up by now. Regardless, if it is a 19th century observation of the USA in its early years as the factions began to burn through the Constitutional firewalls, it deserves to be sourced and referenced prominently. Another well-worn cliché fits here perfectly: Truer words were never spoken.
Have to respectfully disagree on this one. Two points specifically …
(1) There is nothing American about a 90% tax bracket. In fact the progressive income tax was a stated goal of the Communists. Moreover, by definition it is literally a Marxist idea: “From each according to his ability …”. Not surprisingly, I have always found that the young’ins (not you Dave) that spouted Marx were always the weakest in math, even the most basic math of percentages. It is self-evident that an equal percentage inflicts the same exact ‘pain’ on any two people regardless of their income or wealth. The cash value of that pain of course varies from person to person, but unless equalization is the goal it is irrelevant. Equalization cannot be the goal (at least in an American system) because then we are in effect abolishing private property as we leave it to the politburo I mean Congress to decide what we actually own and get to keep. The line between Communism and Slavery is very blurry indeed.
(2) I would suggest that there is high risk to simply wiping out this unprecedented debt using *any* means. Take the example of your kid that runs up his theoretical platinum credit card and somehow blows past all the upper limits by an order of magnitude (there is *no* good comparison). Were you to somehow zero his debt it starts over again! What will happen is that a repeat of what we have seen will continue again. Stupid people will once again elect Democratic Socialists promising to spend on projects and invest in children (blah blah). The debt will skyrocket, hands will wring, Republicrats will get elected, fights ensue, budgets eventually get balanced. Rinse Repeat. Look at this graph and pay special attention to the color of the datapoints.
Pain and consequences will need to be felt or else we just go on and on and on. Besides, to simply cover these expenditures all at once is to give tacit approval not just to Social Security and other things considered ‘ok’, but, it also means to sanction the leftist spending on crap like Piss Christ, and a endless list of other unbelievably offensive items. There needs to be pain. Real pain. There are ways to do this and hold people accountable, but going any further on this subject in this post I suspect might be a thread hijacking.
Dave Springer says:
July 5, 2011 at 1:41 pm
So you honestly believe that you have a right, indeed an obligation to take 70% of another man’s income? Just because he committed the sin of being more successfull than you are?
As to your claim that high income disparities automatically lead to revolution, that to is bunk.
MikeP says:
July 5, 2011 at 1:51 pm
Roy, I tend to agree with many of your points. However, without a level playing field people can become wealthy through manipulation and abuse rather than invention. There is a long history in America of those who’ve used either politicians or political power in this way. I intensely respect those whose ideas make our lives better. I have nothing but contempt for those who achieve the same results by making others poorer.
—
Mike, you are contradicting yourself. First you say that we need govt to create a level playing field, then you complain that some people use govt to give themselves an advantage. Which is it, is govt an agent of good that creates a level playing field, or is govt an agent of bad, giving one player an advantage over another?
The truth is that whenever you give govt the power to influence how the game is played, it will ALWAYS use that influence at the behest of whoever pays the most. The only solution is to NEVER give govt that power. The only role govt should have is to enforce the rules, as Dr. Spencer indicated.
Jerry says:
July 5, 2011 at 5:23 pm
Yes, the US is broke, but that is because our govt spends beyond it’s means. It has nothing to do with free trade.
Manufacturing jobs BELONG here?????
No, manufacturing jobs belong to the company that created them. If they want to move them to a place where costs are lower, that is there right. You claim that you favor democracy, then you claim the dictatorial powers to control business decisions. That’s nuts.
Yes, Ohio is a mess, but that mess is not China, or any foreign countries fault. It is the fault of unions that grew greedy, and politicians that forsook the long term for short term advantages.
The very idea that foreign trade should be elimintated alltogether is one of the most idiotic things I’ve heard in years.
Every country that has tried what you advocate has ended up poorer for it. For the simple reason that no one country will be the best in everything. When you eliminate trade you force your consumers to buy second best products at inflated prices. How does that benefit them? When you protect your companies from competition, you guarantee that your companies will start producing inferior products at inflated prices. Beyond that, how are they to compete if they are forbidden from buying the best themselves.
Your philosophy is not just stupid, it is so short sighted that I am left speechless by ignorance of it all.
Lichanos says:
July 5, 2011 at 7:31 pm
There were no guilds prior to the 12th century.
Was the first century merchant a member of a guild?
Mark WIlson, You apparently don’t read very well. One case is what government should be, the other is what it has too often been. The question is how to promote the former, which leads to better lives for most Americans, and diminish the latter which artificially enriches a few at the cost of the many.
Brian H says:
July 5, 2011 at 10:28 pm
“Interestingly, that doesn’t work. Receipts amount to about 19.5% of GNP regardless of the tax rates. Raise the rates, and GNP falls, and you get 19.5% of a lower number. Lower the rates, and GNP rises, and you get 19.5% of a higher number. Pick one.”
Using Gatesism percentages clouds the reality. 19.5% of GNP is not written in stone. It would be easy to raise rates so that you can get the tax to 30% of GNP if you so desired to cover increased spending. If that fails to raise enough revenue because of declining GNP, you keep raising the percentage until there is nothing left to tax. Only spending caps can stop the insanity.
Jerry says:
July 5, 2011 at 9:50 am
International “free trade” has been awful for the US.
—————————-
You are wrong.
Boeing is trying to open a manufacturing facility which would increase international trade and improve the lives of many in South Carolina but, the federal government (NLRB) has stopped production thereby stepping on “states rights” and reducing the GDP and incomes for workers.
Many technical and high paying jobs terminated putting people out of work and their families in need.
That’s how government “helps” and the fed’s response is to just add them to the welfare system.
I am sorry but it seems that many people here have confused “free market enterprise” with “capitalism”.
They are two very different things.
“Free market enterprise” is explained reasonably well here. But “Capitalism” is the use of accrued wealth to obtain the means of production. The farmer is engaging in free enterprise, but his ability to engage in free enterprise is curtailed if the capitalist has bought all the land for the benefit of his children and will only allow the farmer access to farm the land if the farmer agrees to pay a high rent that absorbs most of the farmers profit. “Capitalism” is almost as big an enemy of free enterprise as communism (which seeks to free the accrued wealth of the capitalists and put it in the hands of the state – in the end this is a change of ownership of the true wealth of the nation that has no net benefit to the ordinary people). Socialism comes in two forms – that form which is seen as an interim stage towards communism and Swedish socialism which was invented by capitalists to stop the working class resorting to communism and taking their wealth away from them – this is the form of socialism popular in Europe.
One day the middle class and the working class will band together to take the wealth from the capitalists and prevent the wholesale ownership of land and factories past the first generation and this will be called “democracy”. But I fear we are a long way from seeing it here in Europe until “socialism” is seen to have failed.
@Dave Wendt:
Regarding China – as someone that is heavily involved in outsourcing you are spot on about this. Basically the Chinese are the new slave labour. They make NO MONEY.
People (including many economists and businessmen) think China is RICH, They are wrong. China looks as if it is rich because it has a high GDP. But GDP is simply a measure of turnover of private industry added to public expenditure. China has a high GDP because the market value of the finished goods it makes is high, and so is its public expenditure. But look more closely and you will see that they may make a $400 smartphone but only $6 of that STAYS IN CHINA, The rest goes to Europe or the US. Then the public expediture (which pays for the ever expanding infrastructure) is actually being paid for by Chinese debt. In terms of wealth created by making smartphones and the like, Europe and the US is taking about 80% of it and China about 1% – but the GDP figures don’t reflect this.
GDP is an outdated concept that only made sense before outsourcing became commonplace.
I bet the Chinese government is as confused about this as everyone else is. But since we cannot employ people in our Chinese factories because we can’t get any more people to move into the cities, wage inflation in China is going through the roof and now we are looking more and more at India as the next low-wage manufacturing site. I predict that over the next 10 years the Chinese economy will implode just as the Pacific Rim “tiger” economies imploded for exactly the same reason before them.
The fact is you can make a country into a superpower by selling patio heaters on the cheap.
Ryan, that is a nutty statement. The free market system is a self propagated pyramid shaped system whereby those with money to spend will be caused to do so by those that market their goods in such a way to create need for them. At the wide bottom end, necessities dominate and many people buy into that level. At the pointed top end, desires dominate. Fewer people buy into the top level. But in order for the free market system to work from the bottom up, money from many people must flow upwards and become increasingly consentrated into fewer holders of that money. What we pay for must bring us more value than the cash we used to buy it with.
What your scheme intails (relieving the wealthy of their assets) is a barter system, not a free market system. It goes like this: I build a tower on your land in exchange for a different piece of your land. A straight across deal. No one gets rich. The trouble with that is that value inhanced incentive disappears. If no one gets rich, no one will see the need to market something because no one has need of anything outside of what they already own. Thus the free market system will not be born.
Chuck Nolan: I agree with you on this one. Opening a plant in SC, or moving a plant to SC, is certainly NOT “International free trade.” It’s trade within the US. The Obama administration is way out of line on this issue.
Mark Wilson: I am advocating the system that we used to have, and one that actually works in practice. It was in place before our founding up until roughly 1990. It works. It is constitutional, in the original sense (prior to the 16th Amendment). It produced the greatest accumulation of wealth and nation in human history.
Ohio is a mess because of NAFTA. Yes, unions are greedy, but they didn’t cause the problem. Tax law did. The same thing that happened to Ohio is happening to the whole US. Can’t you hear the giant sucking sound? If you don’t, then you will hear it soon.
If a company wishes to relocate off shore, that is indeed their right. If the leave, however, their products, like all foreign products, should be subjected to import taxes. Just like Japan and China severely tax products produced here. Also, that company should not be given preferential tax breaks. Nor should they expect the US military to defend them when they are on foreign soil. I do not claim dictatorial powers to regulate industry, only to tax imports and exports. Read the Constitution.
Our nation is bankrupt because we spend at the levels we used to back when we had an industrial manufacturing base. If we had not exported our manufacturing, we would not be bankrupt today.
On the contrary, every country that has tried what I advocate has thrived, as did the US, until (roughly) 1990 when we stopped protecting our industrial base and encouraged industry to move off shore. China is doing it now. Japan has always done it. Most of our “free-trade partners” are not advocating free trade at all, they are simply encouraging American companies to move manufacturing over there. They impose heavy import taxes to protect their own industry, and they are quite militant about it.
MikeP: I read quite well. What I’m pointing out is that your goal of getting govt as it should be is a fantasy. It will never happen. You might as well pass a law requiring all men to behave like angels. It ain’t gonna happen. When you give govt the power to directly influence the economic sphere, that power will always be for sale to the highest bidder. You can wish for a govt made of uncorruptible men from now till the cows come home, but it will never arrive.
Ryan says:
July 6, 2011 at 8:37 am
One day the middle class and the working class will band together to take the wealth from the capitalists and prevent the wholesale ownership of land and factories past the first generation and this will be called “democracy”.
—
No, the true name for that which you desire is communism.
Anna V says:
Even for Greece, the sovietization of its economy, a 40% dependence on government posts and civil service salaries, the road to hell was oiled with outsourcing all it manufacturing to far and near cheaper countries. Free markets after all.
Yes, “free markets”, but instead reacting to the actual source of the problem, the “sovietization” of Greece, by fleeing Greece! Thus automatically leading to an also inappropriately demonized “outsourcing”, which Greece is in fact lucky to still have as a possibility – for example, so that Greece can even be possibly bailed out of its current self-generated and apparently addictive Socialist collapse!
Anna, do you still not notice how you have allowed mere words to become self-gratifyingly demonized in your own mind regardless of the real processes they actually refer to? Somewhat similar to your needful mis-application of the demonizing term “Imperialism” to America simply on the basis of its number of foreign Military “bases” without making a real argument on the basis of what these “bases” actually do?
Obviously the solution is not to demonize America’s massive success as achieved under its Constitutional Capitalistic system which rightly places the individual as primary to wealth creation and has made the “rich” of the past now appear to be largely comparable in their wealth to the current “poor”, especially as indicated by the current actualities of action/life-style in fact possessed by the poor, but not even imagined possible by the previous rich – including the support of massive numbers of people solely by means of “Welfare”, enc. – by America’s system having very objectively and increasingly raised essentially everyone’s standard of living via real wealth creation.
And far from also demonizing the “rich”, I’d even go to the extreme of arguing that if the “rich” don’t get richer and more and new “rich” validly appear and even change places with some of the previous rich…as opposed to the Communistic tactic of simply defining “rich” downward so as to take more of people’s “riches” so they all become equally poor, or by propagandistically defining it upward so that being “rich” has no practical meaning precisely because there are so few of the “rich”…if the rich don’t get richer under a system such as America’s Constitutional Capitalism, wealth creation itself is suffering and so are the “poor” and the “middle class”, because then even the rich can’t get richer! The whole economy is therefore suffering because now the rich can’t get richer than the poor, when they should be able to do it otherwise, for example, simply by putting enough of their money into something like their own Country’s interest bearing vehicles!
Regardless, a drag upon wealth creation is what always happens when the Government stifles the incentive for its individuals to engage in trade for their own benefit, as once again amply demonstrated by European Socialism’s “sovietization”, which outsources free-market wealth creation itself.
The solution for suffering Countries, and now for America itself, is to try to replicate America’s baldly successful system of Constitutional Capitalism, not to demonize its truly enlightened placement of its own unenslaved individuals as the proven font of wealth creation.
Thanks ROY,
I have a master degree in electrical engineering. Lately, I’ve been studing fluid dynamics to understand how wind turbines affect our world. My research is disturbing. If we build millions of those things across the world, we’re doomed. I can theorize what will happen, but I don’t have access to the resources to prove it. I plan on retiring next to the ocean overlooking Conception Bay Newfoundland. No worries about rising seas, my bluff is 400 ft above sea level.
Hal
Dave Wendt says:
This, of course, should not be surprising since the Nobel Prize for Economics some years ago went to a guy, whose name escapes me at the moment, whose life work fairly thoroughly demonstrated that governmental regulatory schemes inevitably devolve into protecting the corporations they were meant to regulate from the vagaries of the market.
Dave – While I will definitely check on this myself later, I would very much appreciate if you could somehow recall and share the name of the person you mention. (It would make my searching much easier). I am interested in reading some of his work.
Brian H says:
Interestingly, that doesn’t work. Receipts amount to about 19.5% of GNP regardless of the tax rates. Raise the rates, and GNP falls, and you get 19.5% of a lower number. Lower the rates, and GNP rises, and you get 19.5% of a higher number. Pick one.
Brian: I’ve never heard this before (that is, not specifically as you present it) – where did you find this idea / information?
Thanks!
Ohio is a mess because of NAFTA. Yes, unions are greedy, but they didn’t cause the problem. Tax law did. The same thing that happened to Ohio is happening to the whole US. Can’t you hear the giant sucking sound? If you don’t, then you will hear it soon.
—
Not true. Not even slightly true. NAFTA has created jobs, not destroyed them. The truth is that we in the US still make lots of cars, more than were made before NAFTA. It’s just that they are no longer made in Ohio, or Detroit. And that is 100% the fault of the unions.
The idea that shutting of trade will help a country was discredited hundreds of years ago. It has been disproven time and time again.
The US is still that largest manufacturer in the world. (China is a close second and may pass us soon.)
TonyG says:
July 6, 2011 at 11:14 am
“Dave – While I will definitely check on this myself later, I would very much appreciate if you could somehow recall and share the name of the person you mention. (It would make my searching much easier). I am interested in reading some of his work.”
His name is George Stigler
http://en.wikipedia.org/wiki/George_Stigler
The problem with the USA budget is simple. In 2010 the government collected $865 billion in Social Security and Medicare/Medicaid taxes. It paid out $1.494 trillion in those benefits, a deficit of $629 billion. Now add in the interest on that deficit spending and you have what you have today. Pyramid schemes never work.
@Dave Wendt: Thank you!
Ryan says:
July 6, 2011 at 9:02 am
@Dave Wendt:
” But since we cannot employ people in our Chinese factories because we can’t get any more people to move into the cities, wage inflation in China is going through the roof and now we are looking more and more at India as the next low-wage manufacturing site. ”
Recent developments suggest that the labor arbitrage calculation may be swinging back in our favor, although it has never been as bad as the conventional wisdom would have it. After all, five of the top ten autos with the most U.S. content are made by Toyota And Honda. Mitsubishi, Mazda, Subaru, BMW and others have significant manufacturing presence in the U.S., with some of them actually exporting vehicles to the world market from here.
If we could limit the EPA to regulating actual pollution, repeal Obamacare and move to covering health care with high deductible catastrophic insurance and tax deductible HSAs, redo Dodd -Frank to create a greatly simplified and more certain financial regulatory environment, unleash the choke collar from our energy sector allowing the massive resources that are now out of bounds to be effectively exploited ( North Dakota has avoided most of the wounds of the last several years because they are relentlessly expanding their oil industry), and generally rescind everything the government has done in the last 3 years, there is massive capital both in corporate and bank coffers as well as in internationally held accounts that would likely flood into our economy. The growth that would be created would probably be unprecedented, and might actually move us to a point where, with changes that could be politically sellable, our entitlements burden could be made sustainable for long enough that the real reforms required to do a long term fix on them might be possible.
If you all would agree to grant me dictatorial powers for about ten years I’m pretty sure I could get it done.
Great, I just ordered the book to update my Milton Friedman “Free to Choose”.
See http://miltonfriedman.blogspot.com/
Dave Wendt says:
July 6, 2011 at 1:34 pm
“If you all would agree to grant me dictatorial powers for about ten years I’m pretty sure I could get it done.”
Yes, the campaign slogan of all dictators. 🙂
mod: Thomas L. Friedman of the NY Times has lamented that the US did not have the system of government as China in order to implement “climate policies”.
Did Roy Spencer just leave his credibility behind? This new book is weird, and now he states he is just as biased as Hansen. Too bad:
http://climatecrocks.com/2011/07/06/roy-spencer-and-all-this-time-we-thought-you-were-a-scientist-weird/#more-5345
I cannot believe everyone rattling off nonsense about the flaws of capitalism, GDP discrepancies, flirting with socialism and communism, NAFTA, a return to confiscatory tax brackets! Put away you spreadsheets and calculators because you are exploring rabbit holes.
Thank you. Finally some sanity. It is exactly as you say Tom. Not Rocket Science!
Wikipedia: 2010 United States Federal Budget
So simple a caveman or climatologist can do it.
If you eat more calories than you body consumes, you will get heavy. But even this simple fact is lost on many people these days. Just look at all the big fat obese dummies running around your towns.
The answer is a diet. That is the only answer.
@Mark Wilson:
This is a false dichotomy Mark, all that is not Capitalism does not result in Communism. Mutual companies are not capitalist and even public limited companies are not truly capitalist as defined by Marx, since the ownership is not wholly in the hands of private individuals. So you can have situations where the ownership of e.g. land is neither in the hands of private individuals or in the hands of the state. Communism is about so much more than ownership of the means of production – it is also about limiting the ability of the individual to accumulate wealth (which inadvertantly means an economy where there is no “carrot” and thus an economy where the “stick” must be the substitute or economic collapse is the inevitable result).
In Europe we have a situation where for hundreds of years the ownership of the majority of the wealth of Europe has ended up in the hands of a few private individuals. Those individuals often do not work at all, but simply benefit from trust funds set up generations ago. The archetype in the UK would be the Duke of Westminster, one of the country’s richest men who has done not a days work in his life but benefits from a trust fund based on wealth created 900 years which has not only made his family rich but continues to make his family even richer as it squeezes the ordinary working man by buying up yet more property. What the Grosvenor family buys the rest of the UK can never have. It is because of people like the Grosvenors that Europeans were so keen to run off to the US to seize all the land from the Indians! But eventually the same will happen in the US, The population will be forced ever higher to push up land prices and the new aristocracy will be the Kennedy’s and the Bush’s and so on and so forth. Ordinary people will find that a house that costs $50,000 to build will cost $500,000 to buy just because of the land it is sitting on and the peice of paper that says it is OK to build there.
Ryan says:
July 6, 2011 at 8:37 am
“I am sorry but it seems that many people here have confused “free market enterprise” with “capitalism”.”
You too are confused. Capitalism is the subsitution of capital for labor.
An example. A farmer is working his land with his own labor. Another man comes along and offers to provide the farmer with an ox and a plow so he can increase the output of his farm. The second man asks for a percentage of the farm profits in exchange for his investment.
That is capitalism. No more and no less.
Mark Wilson says:
July 6, 2011 at 5:24 am
Dave Springer says:
July 5, 2011 at 1:41 pm
“So you honestly believe that you have a right, indeed an obligation to take 70% of another man’s income?”
I don’t have that right as an individual but the government which I help elect certainly has that right. The only obligation I feel is to not burden future generations with debt they did not voluntarily undertake. That’s a moral obligation though and your moral values may be different in that you think it’s okay to borrow money and let someone else pay your debts.
Blade says:
July 6, 2011 at 4:07 am
“(1) There is nothing American about a 90% tax bracket.”
So Eisenhower wasn’t an American?
I’m not interested in what’s American and what isn’t in any one person’s opinion. I’m interested in solutions that work.
Ryan, I never said that everything that isn’t capitalism is communism. I said that the agenda you are pushing is communism. See the difference?
Nuke says:
July 5, 2011 at 3:18 pm
“You’re on absolutely the wrong track talking about tax rates.”
Maybe, but I’m just going by what worked and what didn’t in the past.
“If you want to increase tax revenues, lower the rates.”
Channeling Ronald Reagan? That only works for a while as those with the ability to adjust declared income declare more of it shortly after the decrease takes effect. Sort of like make hay while the sun shines. Eventually they don’t have any more excesses to declare and revenue falls back to sustainable economic growth level. You want to see tax revenue really spike upward and fast announce an increase in the tax rate effective in the coming year and then watch the mad scramble to take profits before the rate increase becomes effective. These are just shell games played by those in a position to play.
“A broad, flat and low tax system is the way to maximize revenue.”
Sure. Let’s start by making SSI contributions a flat tax on all income, earned and unearned. The current number of 10% is good. Just make it flat across the board on all types and amounts of income. The biggest single spending item in the U.S. budget and the biggest single future liability would go away with the stroke of a pen.
What say you?
That’s why Russia adopted a flat tax years ago.”
Lowering tax rates only works when rates are excessive to begin with and it’s only a temporary rise in revenue as people with the luxury of deciding how much income to declare in any one year take advantage of the lower rate.
How’s that flat rate working out for Russia? Forgive my skepticism but I haven’t exactly been hearing many Americans say they wish they were living in Russia. Singapore has a flat tax and is probably a better example. They also have a benevolent dictatorship where things like chewing gum in public is a crime because the dictator didn’t like finding it stuck to the sidewalk.
That said I could support a flat rate for social security. Currently we have an anti-progressive rate on that. Everyone pays a flat rate of 14% (half direct and half in employee matching contribution) on the first $90K or so of income then the rate drops down to 1.5%. I’m working from 10 year old memories so forgive me if the exact numbers are out of date. The Social Security quagmire would be fixed overnight by a flat rate on SSI contributions.
Yeah, people are just beating down the doors to live in Russia. Great example. For me.
I wonder how far Spencer is willing to go with free market capitalism.
Would he make it legal to sell organs for transplant? Would he eliminate OSHA and leave it to industry/worker contracts to determine what level of occupational hazards are acceptable? How about pharmaceuticals – would coca cola be legal to make with real cocaine again? Would a person in pain be able to purchase opium? Go a doctor who has no license, a lawyer who never passed the bar, and things of that nature? Will Elly-Lilly be able to package snake oils and claim it cures cancer, colds, and colic without either evidence or safety testing? Or how about more touchy subjects for Roy like abortion. Is that something that should be available on the free market at least until the biblical definition (quickening) to mark the beginning of life? Back alley abortions for $10 for the needy? Prostitution? Gambling?
Or how about education. Should we do away with government interference in the business of higher education or setting standards for public education? All schools should be private, right? Or how about research and development? Who would actually pay Roy Spencer for the sattelite sensing work he does – Greenpeace? Would the free market build particle accelerators, launch Cassini, or put a man on the moon? Would the free market make sure that our ground water doesn’t get poisoned by industrial byproducts?
I could write a longer book than Roy on the bad things that can and demonstrably do happen in free markets. The root cause is the same as the problem with socialism and communism. None of them can work so long as some fraction of humans are greedy and without social conscience.
The free market ain’t no walk in the park, Roy.
Spencer is naive.
Dave Springer says:
July 7, 2011 at 4:55 am
You don’t have that right, but govt does? If a majority of people voted to bring back slavery, would that be within govt’s rights as well?
You claim it as a virtue, not burdening your children with a debt they did not vote for.
On the other hand, you have no problem forcing other people to pay for the goodies that you want, yet they did not vote for.
Nice bit of hypocrisy there.
Dave Springer says:
July 7, 2011 at 5:59 am
SO the only difference between the US and Russia is they have a flat tax and we don’t?
As to your claim that lowering taxes only works for one year, that is an utter load of bull.
Lower taxes always result in more economic activity, which in turn increases tax revenue.
That’s been proven time and time again.
Like most lovers of govt, Dave can’t envision a world in which govt doesn’t make all major decisions, since individuals who don’t work for the govt are not capable of running their own lives.
Why shouldn’t people be allowed to sell organs for transplant?
Since OSHA has done absolutely nothing to improve worker safety, why should it’s elimination reduce worker safety. Take a look at the record. Worker safety was improving since long before OSHA was dreamed of, and that rate of improvement did not increase after it was created. Employers have incentive to keep their workers safe. First, when a workplace is unsafe, you have to pay workers more to compensate. Second, training new workers to replace any worker hurt is expensive.
As long as Coca-Cola did not hide the fact that there was cocaine in it’s formula, why shouldn’t it be allowed to put it in there?
Why shouldn’t I be allowed to go to a doctor who hasn’t been approved by the govt?
Why shouldn’t I be allowed to use a lawyer who doesn’t have the official govt seal of approval. For most of this nations history, neither lawyers nor doctors had to get govt approval before opening up a practice.
Why shouldn’t Eli-Lilly sell snake oil, as long as they don’t advertise that the product has been clinically proven, what’s the harm.
Both prostitution and gambling should be legal.
If you can demonstrate that govt standards for education have improved education, please present them. Real scientists have been searching for such evidence for decades. The fact is, the more govt has gotten involved in education, the worse education has gotten.
Who would pay for scientific progess. Strange thing, there was scientific progrss for hundreds of years prior to the notion that only govt could pay for it.
Would the private market protect ground water from pollution. Of course it could. In fact it did so prior to govt getting in the way. Look up riparian rights.
Go ahead and write that book, then I will follow along and demonstrate that none of them are the result of the free market, rather they will be the result of govt interfering in the operation of the free market.
Ryan says:
July 7, 2011 at 2:12 am
“In Europe we have a situation where for hundreds of years the ownership of the majority of the wealth of Europe has ended up in the hands of a few private individuals. Those individuals often do not work at all, but simply benefit from trust funds set up generations ago. The archetype in the UK would be the Duke of Westminster, one of the country’s richest men who has done not a days work in his life but benefits from a trust fund based on wealth created 900 years which has not only made his family rich but continues to make his family even richer as it squeezes the ordinary working man by buying up yet more property. What the Grosvenor family buys the rest of the UK can never have. It is because of people like the Grosvenors that Europeans were so keen to run off to the US to seize all the land from the Indians! But eventually the same will happen in the US, The population will be forced ever higher to push up land prices and the new aristocracy will be the Kennedy’s and the Bush’s and so on and so forth. Ordinary people will find that a house that costs $50,000 to build will cost $500,000 to buy just because of the land it is sitting on and the peice of paper that says it is OK to build there.”
In regard to permanent wealth stratification the U.S. is entirely different from Europe, which should have long ago exposed the folly of “wealth redistribution”. There have been quite a number of studies done in the U.S. which actually follow the incomes of individuals over extended timeframes, usually 20 years. With significant overlaps they form a consistent record back to at least the 50s. The results of all of the studies are, within experimental limits, nearly identical. They show that those who start in the bottom quintile almost inevitably move to higher quintiles at the end, with not insignificant numbers moving all the way to the top quintile. But, even more significantly, they show that those that start in the top quintile are almost as likely to end up in lower ones, with those that move all the way to the bottom nearly matching those that made the reverse trip. Over time in the U.S. it is a small minority whose income level stays the same over time.
The stratification that is a feature of wealth in mostly Socialist Europe would seem to be the inevitable result of letting bureaucrats pick winners in an economy. History has repeatedly demonstrated that, when picking the winners of the future, they always pick from the winners of the past.
Until the election of BHO, I would have laughed at your suggestion that the U.S. will end up similarly stratified. But now I fear that if this dick ( a characterization that is my homage to Mr. Halperin who got to experience the consequences of speaking truth to liberal power) manages to get himself reelected we will end his term more like the Europe of today than the Europe of that future will be. Of course, there is the not insignificant possibility that by 2016 we will have already followed the PIIGS down the toilet bowl of history.
The Social Security quagmire would be fixed overnight by a flat rate on SSI contributions.
—
I love the way certain people just assume that every problem in the world could be solved, if only someone else had enough of their money stolen, and spent on them.
Raising SS taxes would not solve anything. The reason for that is simple if you take just a few seconds to think about it for once. SS payouts are based on SS payments. When you increase the SS taxes, yes more money comes in, NOW. But in a few years when those evil rich guys start retiring, their SS payments are going to be increased by the same amount.
Problem not solved, and a lot of people get a poorer retirement because if the money hadn’t been stolen from them, it could have been invested in something that gets an actual rate of return.
when picking the winners of the future, they always pick from the winners of the past.
—
Or they pick their friends, or the children of friends.
Socialism/Communism always results in an elite class that does what it can to make sure that it doesn’t have to suffer from the deprevations it enforces on everyone else.
And despite the delusions of some, any system that prevents individuals from owning land, as Ryan advocates, is properly called communism.
Dave Springer says:
July 7, 2011 at 9:14 am
“I could write a longer book than Roy on the bad things that can and demonstrably do happen in free markets. The root cause is the same as the problem with socialism and communism. None of them can work so long as some fraction of humans are greedy and without social conscience.
The free market ain’t no walk in the park, Roy.”
Free market creates winners and losers. That’s the way it is and should be. How did we get into this idea that no one should lose? Everyone gets a trophy just for participating. No one should keep score because losers might feel like …. losers. What bull spit.
Dave, where do you get the idea that anything should be a walk in the park?
I expected better. Most of us understand the tax rates are only vaguely related to the sitting President that signs these massive bills developed in Congress, with some exceptions like JFK and Reagan that actively hammered Congress to reduce tax rates. Eisenhower was a political general, a pencil pusher (who did learn quickly once promoted) who was a good President in the traditional figurehead sense, but was hands-off to the point of being silly putty to the Congress. But I digress here.
What would 100% tax rate be called? Slavery? I would think so, without the chains and whips no doubt but at least my ancestors got food, room and board. How can we even be discussing this in the country founded on a tax revolt, not to mention private property, individual liberty and freedom.
These things just make me harden my view that as spoiled little brats in the 21st century that somehow forgot how we got here (shortly after Independence Day no less) we need a good spanking. Let’s repeal that damn 16th Amendment and let the entire welfare state collapse. We allowed Communists/Socialists to infiltrate a free society and like cancer it is affecting many cells throughout our nation’s body. It will require radical treatment to beat this disease.
To answer your question, Eisenhower has nothing to do with it. There is nothing American about a 90% tax bracket. It would not matter who was President. It is Marxism. It is Socialism. It is Communism.
@Blade
We seem to have left it without saying that 90% tax rate during Eisenhower administration (it was still 70% while JFK was POTUS) was a top marginal rate. It didn’t kick in until earned income exceeded $10,000,000. If you think there should be no limit on how much one person should be allowed to extract from gross domestic product for personal use then we don’t really have any common ground for discussion. My position is that such a level of personal reward would not be possible without the commonly owned infrastructure so when the bills for the infrastructure come due you look for whoever benefitted the most from it to pay the most of said bill. It seems totally fair to me and I’m more patriotic than most people – how many of you can say you volunteered four years of your life to honorable service in the United States Marine Corps? I could have rode a scholarship through MIT but instead I chose to give the four years following high school to my country. So don’t even begin to lecture me about what’s American and what isn’t, “blade”.
P.S. Blade
“Most of us understand the tax rates are only vaguely related to the sitting President that signs these massive bills developed in Congress”
Not as many of us understand that without a presidential signature no bill becomes law without a 2/3’s majority in each house of congress. This includes tax laws. Eisenhower signed the bill into law. Deal with it.
Tom in Florida says:
July 7, 2011 at 1:31 pm
“Free market creates winners and losers”
Of course. And upward mobility is the carrot at the end of the stick that keeps the losers determined to become winners. If you make the bottom quintile too comfortable with public largesse many become fat, dumb, lazy, and content to stay comfortably on the bottom with fellow bottom dwellers. On the other hand if you make it too easy for the top quintile to accumulate wealth you end up with a small number of unelected people controlling virtually all economic activity. Hypothetically a large middle class in a representative democracy maintains a healthy balance because they are close enough to the bottom to know “there but for the grace of God go I” so they are uncomfortable letting too many people sleep in the streets and close enough to the top to keep reaching for it.
This has been foiled in recent decades by massive borrowing and spending on social programs with a concommitant reticence to raise the taxes needed to pay for it on some demonstrably unworkable economic principle that lowering tax rates somehow generates increased tax revenue through accelerated economic growth. This was popularized by Reagan and called “voodoo economics” because it seemed like magical thinking and indeed after a few decades of testing it turned out the detractors were right. There’s no such thing as a free lunch and unlike a tide which raises all boats the tide from Reaganomics lifted some boats a lot higher than others and, unfortunately, the boats it raised the most were never in any danger of hitting bottom. Social programs meanwhile made the bottom too comfortable and while this had the effect of decreasing overall poverty it was an illusion because the massive borrowing was driving the middle class into poverty once the bill came due. The bill is coming due now. Everyone needs to tighten their belts to pay it. Nobody is willing to do so and the national debt and unfunded future liabilities just keep piling up deeper and deeper. Something’s gotta give and there isn’t a long term solution put in place it’ll give all at once. Sort of like not opening up the flood gates on a dam and just letting water pile up behind it until the dam fails. There’s a choice between having some small floods over a long period of time or one catastrphic flood all at once leaving you with no flood control at all in the future.
. That’s the way it is and should be. How did we get into this idea that no one should lose? Everyone gets a trophy just for participating. No one should keep score because losers might feel like …. losers.
Dave Springer says:
July 8, 2011 at 7:40 am
” It seems totally fair to me and I’m more patriotic than most people – how many of you can say you volunteered four years of your life t honorable service in the United States Marine Corps?”
David, I spent 9 years in the USMC and a lot of others have spent their time serving our (their) Country in the military so let’s not go there. Semper Fi
“If you think there should be no limit on how much one person should be allowed to extract from gross domestic product for personal use then we don’t really have any common ground for discussion.”
I have to disagree of your wording that a wealthy person “extracts” from the economy. Only the government extracts via taxes. If a person wants to strive for unlimited wealth than good for them. Along the way they will create jobs, spend money, pay taxes and contribute more to building our economy than they will ever take out of it.
” My position is that such a level of personal reward would not be possible without the commonly owned infrastructure so when the bills for the infrastructure come due you look for whoever benefitted the most from it to pay the most of said bill. ”
Your term “benefited the most” is very subjective. The bottom 50% of wage earners pay almost not tax yet they use the commonly owned infrastructure made possible by those paying the taxes. Do they not reap benefits from others contributions? When large companies build new buildings they are required to improve the commonly owned infrastructure around those buildings to the benefit of all. People that create wealth benefit everyone. Restricting end rewards would only make those willing to invest restrict their investments. Who gets hurt the most then?
Dave Springer says:
July 8, 2011 at 8:32 am
Let’s us not forget several things that were done that have had great effect on the budget process:
1. baseline budgets. They go up by an amount no matter what. Stupid idea. But it eliminates blame from Congress. Started in the Carter years.
2. placing social security taxes in general revenue. Again stupid idea but since at the time social security taxes were raking in 50-100 billion more than paying out congress could not help themselves. Started in the Carter years I think.
Things that went along with changing taxes;
3. When the rates were reduced deductions were eliminated as offsets. I used to be able to deduction the interest on I paid on buying a car (back in the late “60’s early “70’s) can’t anymore. Many have swapped deductions for rates.
4. EITC(earned income tax credit). Pay no taxes but get money back. Stupid idea. I have actually heard people say they will stop working so they don’t go over the allowed amount for getting the EITC. Nixon did this.
You want to stop generational wealth accumulation then get congress to do away with trusts, foundations, and the like. The Waltons, Kennedy’s, Fords, etc have good tax lawyers that set up trusts etc and pay no(very little) taxes. Warren Buffet gives 35 million to the Bill Gates Foundation so Buffet rights that off as a deduction but gets to help Gates decide how the money is spent. Professional athletes do this all the time.
For me a flat tax of say 15% for all persons. One deduction of 2 times poverty level say $30000 and pay 15% on the remainder. Looking in anothers wallet and seeing how much he should pay shows envy as far as I am concerned, and anyway “thou shalt not covet” seems to apply to taxes. Those wanting higher taxes appear to violate that one.
Don’t get snippy with me Dave. We can all sit here and compare service histories, past security clearances, post-service careers, people employed, taxes paid (etc) and it won’t advance the argument a single iota because it is irrelevant (excepting those unemployed momma’s boys who think they have a right to set my tax rates). I was careful not to attack you personally (because more often than not we are playing on the same team) only the position that government completely controls MY money.
Enough obfuscation, Congress sets taxing policy, sometimes with input from the President, but regardless of how they sneak through their bills, by 2/3 or or 3/4 or 50% + 1, each one is a trojan horse. Plausible deniability is built-in to the system which the DC bureaucrats enjoy immeasurably. Dead-of-night deals made to 218 members affecting 300 million people (e.g., Obamacare). Even the old Politburo looks good these days. Someday, if a clean standalone tax rate hike sails through the Congress so that the critters voting for it can be identified and ridiculed is the day we can point to a President or Senator Schmuckface or Representative Retard and blame them personally. All I was doing was pointing out that pinning that tax completely on Eisenhower, was juvenile and beneath you. And why do it anyway, just to somehow justify a 90% tax bracket by using Eisenhower? I think you have insulted him. Deal with it 🙂 Anyway, we know how the game is played, it’s how we got here. It is how taxpayers funded ‘Piss Christ’ and the mating habits of snail darters.
This stuff about what a free person has for ‘upper limits’ of being ‘allowed to extract from GDP’, that Government can decide what people have for earning limits and for what use, is just so alien to me. Is this what we have come to: Government can specifically target a small minority of people and literally confiscate 90% of their private property because it is politically correct? But 100% is presumably over the line though? Haven’t we explored similar territory already? I will agree with you about one thing, we have no common ground here. Dave, just to be clear the rest of this comment is not addressed to you personally! It is just me babbling about Marxism vs the Founders and other things which often happens when I read Socialist philosophy that makes me throw up a little.
The Framers did not get together in the summer of 1787 to create a monster. Even the very few ardent believers of a strong central government at the time would be ‘radical’ TEA Partiers today because the monster now far far FAR exceeds anything that England tried to ram down their throats. This is self-evident. Hamilton and Adams would be fire-breathing Jeffersonians if they got a look at today’s federal monster. Everything thing they did in Philadelphia was about kneecapping the growth of the federal monster. If current Socialists had been present then, they would have been tarred and feathered. If colonialists had a view of today’s federal monster, there would have been no USA, just endless wars between the various European landlords of American colonies and territories. Things went terribly wrong somewhere along the way.
What is dangerous to our future descendants is that with each generation we are actually slipping further down the slope, taking for granted the things the previous did not take for granted. We used to make fun of those that gave us Prohibition and the Income Tax, however at least they were honest enough to realize that they required a Constitutional Amendment for such a radical change (although that does *not* make them moral or legal or ‘American’). Fast forward 80 years to today and we have people now putting forth opinions that the FedGov is omnipotent, in charge of all private property, no Amendment needed or expected. This is a symptom of ignoring the Declaration of Independence, the spirit of our founding and all the profound arguments in the Federalist. Our rights come from God (or whatever someone chooses to believe in), they most certainly do NOT come from FedGov which is a creation of the states and the people. If there is a clear definition of ‘American’, it is that our rights do not come from man.
Government that decides what we can keep (“One for you nineteen for me”) is about as bad an idea as any that came from man’s mind. It is even worse when it is done under the color of law or the banner of democracy because it is an appeal to authority to shield it from accountability. That is immoral. That is NOT American. What is American? It is that government does not own the people, the people own the government. To prove how far we have slipped into the logical inverse just consider this, under those pushing the Socialist big government view today, it would now require a Constitutional Amendment to protect private property and ban progressive taxation. Roles are now completely reversed …
From this …
God >> People >> States >> FedGov
To this …
FedGov >> States >> People:
Making things worse yet is that in our modern era, Santa-Hood Socialism is even more diabolical. Politicians routinely TAKE someone’s private property and then take credit for giving it to someone else! It is bribery using the victim’s money to buy someone else’s votes to in turn pass legislation to go after the victim yet again! Personally, I have far more respect for an average street thug junkie that tries to rob me, than for these political thugs that do rob me and then spend my money on ‘Piss Christ’ and buying votes of welfare seeking malcontents so that they can come at me yet again later, perhaps in some AGW related tax.
Coveting other people’s money is nothing new, it is positively biblical. Marx and his sycophants merely plagiarized earlier wannabe criminals, Diggers and such (known and rejected by the founders) and so on it goes century after century. Inevitably someone comes along to cheer this philosophy of theft, using any number of justifications to legitimize it, allowing it to evolve and survive rather than die the embarrassing death it deserves. I am well aware of what my ancestors had to go through, what it took to end that era, so I am not going to yield to Socialism and just give away my self-determination and private property because it is politically correct and because we have fiscal problems caused by Socialism. Socialism is not the cure to our ills today, it is the disease itself.