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Tuesday, May 24, 2005
Monday, May 23, 2005
Lies? Only When Republicans Tell them, Right?
Written by Evan Sayet
Sunday, May 22, 2005
Sandy Berger is caught cramming top-secret intelligence documents down the front of his pants. Dan Rather is caught using forged documents to try to influence a presidential election.
John Kerry slanders a million of his "band of brothers" in bogus testimony before Congress and then continues to lie for the next 30 years, claiming that in 1968 he was sent by Richard Nixon (who wasn’t president yet) to Cambodia on Christmas Eve (which never happened), hearing the Vietnamese "sing Christmas carols" (the Vietnamese are Buddhists and don't celebrate Christmas) and being fired upon by the Khmer Rouge (which didn't become a military force until a half decade later).
Howard Dean attempts to spread outrageous lies about President Bush about the events of 9/11, only admitting – after being caught in his dissembling – that he never believed the lies himself. Al Sharpton makes his name by helping to fake the rape of a young child. Ted Kennedy clings to his family name after leaving his "female companion" to drown while he swims to shore to sober up before calling the police.
And Bill Clinton – well, he “never had sex with that woman!”
Al Gore recognizes that if he is going to be of any future relevance, he must join the parade of liars. He quickly reinvents himself by morphing from a quiet, thoughtful policy wonk to a demagogue spewing the anti-American venom and propaganda that has become the coin of the realm in today's Democratic Party.
The leadership of the Democratic Party gives a standing ovation to Michael Moore’s fake documentary, which they know to be nothing more than a lie-filled, hate-filled, anti-American propaganda piece. And Ward Churchill's lies not only gain him tenured employment but elevate him to department head at the University of Colorado.
These are not odd zealots but the heart and soul of today's Democratic Party. From its most recent standard bearer to the newly-minted head of the DNC, to its leading voices in "civil rights" issues, to its top foreign policy advisors, to its House and Senate leadership and beyond, lying has become the party’s defining trait, while the few Democrats too decent to lie – the Joe Liebermans and Dick Gephardts, for example – find themselves with less support among the party faithful than did Saddam Hussein and Yasser Arafat.
It is dificult to take seriously charges that Republicans are "liars" when that accusation is leveled in books like Al Franken's "Lying Liars and the Lying Lies They Tell." After all, how much credence can be given Franken when he had to testify in a court of law – to save himself from a mountain of libel suits – that his book was never intended to be taken seriously? The court agreed that no reasonable person could read "Lying Liars" and think it factual and thus the book was published as a fictional joke book.
So why do Democrats lie? Well, for one thing, they have to. Democrats recognize that the vast majority of the American people reject their basic philosophy – as they did resoundingly in the last presidential and congressional elections – which says that all domestic problems can be solved with forced confiscation and redistribution of income, all social issues can be resolved by more and more government control over the citizenry, and all international questions can be answered by ceding American sovereignty to corrupt foreign powers like France and corrupt organizations like the United Nations.
Further they have to lie because their track record is one of utter failure. The Democrats had 40 years of uninterrupted social experimentation that yielded little-to-nothing that enhanced our democracy, either domestically or in terms of foreign affairs. Just like the failing regimes of socialist Europe and the failed regime of communist Russia, Democrats cannot point to a single time when leftism – including their own – hasn't brought despair.
After decades of Democrat-driven "affirmative action," "new math," and "multicultural" experiments, blacks are still disproportionately members of an underclass and our schools (unlike those of the past that created "The Greatest Generation") are now so dysfunctional that we have to outsource the simplest jobs to countries like India. Forty years of leftism has left America more divided, not less divided, as the left pursues its agenda of replacing a "melting pot" that worked with a "mosaic" of multiculturalism, multilingualism, and America bashing that clearly doesn’t.
These are the tactical reasons that make Democrats lie. Leftists are also liars for philosophical reasons and because, I believe, of psychological aberrations. In the words of former feminist leader Tammy Bruce, leftwing Democrats are "malignant narcissists." In their arrogance, modern liberals believe in nothing greater than themselves and that whatever they say – anything that advances their agenda – must be "the truth."
The flipside of this coin is that they believe that anyone who disagrees with them must be – can only be – stupid or liars or racists. In their self-serving, self-aggrandizing minds, they justify their lies in the name of doing the rest of us a favor, the better to get us to do what they believe is the "right" thing.
Believing in nothing but self doesn't just mean rejecting the obvious higher callings of God, freedom, family, and country, but even the smaller things that good people once respected and honored are rejected by today's Democrats.
In times past, a journalist might have had the same ideological bent as a Dan Rather, but his respect for his profession – what they used to call "journalistic integrity" – kept him from being an out-and-out liar. In the old days, Hollywood's love for the movies compelled them to award the best picture Oscar to what was really the best picture. Today, without regard to the quality of the film, the award is given to any movie that advances the leftists' agenda. This year it was the pro-euthanasia "Million Dollar Baby," in contention with a pro-abortion film and one that touted the work of that known pervert Alfred Kinsey.
In another age, a museum curator placed beauty ahead of personal ideology and thus filled the halls of great museums with exceptional works based on their aesthetic value. Today's "artists" do not believe in beauty and thus seeks only to advance their anti-God agenda by filling the space with crosses drenched in urine and pictures of the Virgin Mary smeared in elephant dung.
Democrats lie because, with nothing bigger than themselves to believe in – not God, not country, not democracy, not art, not facts, not history, not freedom – they believe they themselves to be gods, and thus their beliefs become their own “gospel truth." Which is no truth at all!
About the Writer: Evan Sayet is a writer, speaker and pundit in Los Angeles and former communications director for LA for President Bush. He has been a TV and movie writer with credits ranging from "Politically Incorrect with Bill Maher" to the cult classic "Win Ben Stein's Money" and the Discovery Channel documentary "The 70's: When Decades Attack." He is currently working on a book: "Regurgitating the Apple: How Modern Liberals `Think.” Evan’s blog is SayetRight.Blogspot.com.
Written by Evan Sayet
Sunday, May 22, 2005
Sandy Berger is caught cramming top-secret intelligence documents down the front of his pants. Dan Rather is caught using forged documents to try to influence a presidential election.
John Kerry slanders a million of his "band of brothers" in bogus testimony before Congress and then continues to lie for the next 30 years, claiming that in 1968 he was sent by Richard Nixon (who wasn’t president yet) to Cambodia on Christmas Eve (which never happened), hearing the Vietnamese "sing Christmas carols" (the Vietnamese are Buddhists and don't celebrate Christmas) and being fired upon by the Khmer Rouge (which didn't become a military force until a half decade later).
Howard Dean attempts to spread outrageous lies about President Bush about the events of 9/11, only admitting – after being caught in his dissembling – that he never believed the lies himself. Al Sharpton makes his name by helping to fake the rape of a young child. Ted Kennedy clings to his family name after leaving his "female companion" to drown while he swims to shore to sober up before calling the police.
And Bill Clinton – well, he “never had sex with that woman!”
Al Gore recognizes that if he is going to be of any future relevance, he must join the parade of liars. He quickly reinvents himself by morphing from a quiet, thoughtful policy wonk to a demagogue spewing the anti-American venom and propaganda that has become the coin of the realm in today's Democratic Party.
The leadership of the Democratic Party gives a standing ovation to Michael Moore’s fake documentary, which they know to be nothing more than a lie-filled, hate-filled, anti-American propaganda piece. And Ward Churchill's lies not only gain him tenured employment but elevate him to department head at the University of Colorado.
These are not odd zealots but the heart and soul of today's Democratic Party. From its most recent standard bearer to the newly-minted head of the DNC, to its leading voices in "civil rights" issues, to its top foreign policy advisors, to its House and Senate leadership and beyond, lying has become the party’s defining trait, while the few Democrats too decent to lie – the Joe Liebermans and Dick Gephardts, for example – find themselves with less support among the party faithful than did Saddam Hussein and Yasser Arafat.
It is dificult to take seriously charges that Republicans are "liars" when that accusation is leveled in books like Al Franken's "Lying Liars and the Lying Lies They Tell." After all, how much credence can be given Franken when he had to testify in a court of law – to save himself from a mountain of libel suits – that his book was never intended to be taken seriously? The court agreed that no reasonable person could read "Lying Liars" and think it factual and thus the book was published as a fictional joke book.
So why do Democrats lie? Well, for one thing, they have to. Democrats recognize that the vast majority of the American people reject their basic philosophy – as they did resoundingly in the last presidential and congressional elections – which says that all domestic problems can be solved with forced confiscation and redistribution of income, all social issues can be resolved by more and more government control over the citizenry, and all international questions can be answered by ceding American sovereignty to corrupt foreign powers like France and corrupt organizations like the United Nations.
Further they have to lie because their track record is one of utter failure. The Democrats had 40 years of uninterrupted social experimentation that yielded little-to-nothing that enhanced our democracy, either domestically or in terms of foreign affairs. Just like the failing regimes of socialist Europe and the failed regime of communist Russia, Democrats cannot point to a single time when leftism – including their own – hasn't brought despair.
After decades of Democrat-driven "affirmative action," "new math," and "multicultural" experiments, blacks are still disproportionately members of an underclass and our schools (unlike those of the past that created "The Greatest Generation") are now so dysfunctional that we have to outsource the simplest jobs to countries like India. Forty years of leftism has left America more divided, not less divided, as the left pursues its agenda of replacing a "melting pot" that worked with a "mosaic" of multiculturalism, multilingualism, and America bashing that clearly doesn’t.
These are the tactical reasons that make Democrats lie. Leftists are also liars for philosophical reasons and because, I believe, of psychological aberrations. In the words of former feminist leader Tammy Bruce, leftwing Democrats are "malignant narcissists." In their arrogance, modern liberals believe in nothing greater than themselves and that whatever they say – anything that advances their agenda – must be "the truth."
The flipside of this coin is that they believe that anyone who disagrees with them must be – can only be – stupid or liars or racists. In their self-serving, self-aggrandizing minds, they justify their lies in the name of doing the rest of us a favor, the better to get us to do what they believe is the "right" thing.
Believing in nothing but self doesn't just mean rejecting the obvious higher callings of God, freedom, family, and country, but even the smaller things that good people once respected and honored are rejected by today's Democrats.
In times past, a journalist might have had the same ideological bent as a Dan Rather, but his respect for his profession – what they used to call "journalistic integrity" – kept him from being an out-and-out liar. In the old days, Hollywood's love for the movies compelled them to award the best picture Oscar to what was really the best picture. Today, without regard to the quality of the film, the award is given to any movie that advances the leftists' agenda. This year it was the pro-euthanasia "Million Dollar Baby," in contention with a pro-abortion film and one that touted the work of that known pervert Alfred Kinsey.
In another age, a museum curator placed beauty ahead of personal ideology and thus filled the halls of great museums with exceptional works based on their aesthetic value. Today's "artists" do not believe in beauty and thus seeks only to advance their anti-God agenda by filling the space with crosses drenched in urine and pictures of the Virgin Mary smeared in elephant dung.
Democrats lie because, with nothing bigger than themselves to believe in – not God, not country, not democracy, not art, not facts, not history, not freedom – they believe they themselves to be gods, and thus their beliefs become their own “gospel truth." Which is no truth at all!
About the Writer: Evan Sayet is a writer, speaker and pundit in Los Angeles and former communications director for LA for President Bush. He has been a TV and movie writer with credits ranging from "Politically Incorrect with Bill Maher" to the cult classic "Win Ben Stein's Money" and the Discovery Channel documentary "The 70's: When Decades Attack." He is currently working on a book: "Regurgitating the Apple: How Modern Liberals `Think.” Evan’s blog is SayetRight.Blogspot.com.
Tuesday, April 26, 2005
The Case for the Empire
weeklystandard.com ^ | Johnathan V. Last
Posted on 04/26/2005 8:29:53 AM PDT by Jimmyclyde
The Case for the Empire From the May 16, 2002 Daily Standard: Everything you think you know about Star Wars is wrong. by Jonathan V. Last 12/26/2002 12:00:00 AM
Jonathan V. Last, online editor
STAR WARS RETURNS today with its fifth installment, "Attack of the Clones." There will be talk of the Force and the Dark Side and the epic morality of George Lucas's series. But the truth is that from the beginning, Lucas confused the good guys with the bad. The deep lesson of Star Wars is that the Empire is good.
It's a difficult leap to make--embracing Darth Vader and the Emperor over the plucky and attractive Luke Skywalker and Princess Leia--but a careful examination of the facts, sorted apart from Lucas's off-the-shelf moral cues, makes a quite convincing case.
First, an aside: For the sake of this discussion, I've considered only the history gleaned from the actual Star Wars films, not the Expanded Universe. If you know what the Expanded Universe is and want to argue that no discussion of Star Wars can be complete without considering material outside the canon, that's fine. However, it's always been my view that the comic books and novels largely serve to clean up Lucas's narrative and philosophical messes. Therefore, discussions of intrinsic intent must necessarily revolve around the movies alone. You may disagree, but please don't e-mail me about it.
If you don't know what the Expanded Universe is, well, uh, neither do I.
I. The Problems with the Galactic Republic
At the beginning of the Star Wars saga, the known universe is governed by the Galactic Republic. The Republic is controlled by a Senate, which is, in turn, run by an elected chancellor who's in charge of procedure, but has little real power.
Scores of thousands of planets are represented in the Galactic Senate, and as we first encounter it, it is sclerotic and ineffectual. The Republic has grown over many millennia to the point where there are so many factions and disparate interests, that it is simply too big to be governable. Even the Republic's staunchest supporters recognize this failing: In "The Phantom Menace," Queen Amidala admits, "It is clear to me now that the Republic no longer functions." In "Attack of the Clones," young Anakin Skywalker observes that it simply "doesn't work."
The Senate moves so slowly that it is powerless to stop aggression between member states. In "The Phantom Menace" a supra-planetary alliance, the Trade Federation (think of it as OPEC to the Galactic Republic's United Nations), invades a planet and all the Senate can agree to do is call for an investigation.
Like the United Nations, the Republic has no armed forces of its own, but instead relies on a group of warriors, the Jedi knights, to "keep the peace." The Jedi, while autonomous, often work in tandem with the Senate, trying to smooth over quarrels and avoid conflicts. But the Jedi number only in the thousands--they cannot protect everyone.
What's more, it's not clear that they should be "protecting" anyone. The Jedi are Lucas's great heroes, full of Zen wisdom and righteous power. They encourage people to "use the Force"--the mystical energy which is the source of their power--but the truth, revealed in "The Phantom Menace," is that the Force isn't available to the rabble. The Force comes from midi-chlorians, tiny symbiotic organisms in people's blood, like mitochondria. The Force, it turns out, is an inherited, genetic trait. If you don't have the blood, you don't get the Force. Which makes the Jedi not a democratic militia, but a royalist Swiss guard.
And an arrogant royalist Swiss guard, at that. With one or two notable exceptions, the Jedi we meet in Star Wars are full of themselves. They ignore the counsel of others (often with terrible consequences), and seem honestly to believe that they are at the center of the universe. When the chief Jedi record-keeper is asked in "Attack of the Clones" about a planet she has never heard of, she replies that if it's not in the Jedi archives, it doesn't exist. (The planet in question does exist, again, with terrible consequences.)
In "Attack of the Clones," a mysterious figure, Count Dooku, leads a separatist movement of planets that want to secede from the Republic. Dooku promises these confederates smaller government, unlimited free trade, and an "absolute commitment to capitalism." Dooku's motives are suspect--it's not clear whether or not he believes in these causes. However, there's no reason to doubt the motives of the other separatists--they seem genuinely to want to make a fresh start with a government that isn't bloated and dysfunctional.
The Republic, of course, is eager to quash these separatists, but they never make a compelling case--or any case, for that matter--as to why, if they are such a freedom-loving regime, these planets should not be allowed to check out of the Republic and take control of their own destinies.
II. The Empire
We do not yet know the exact how's and why's, but we do know this: At some point between the end of Episode II and the beginning of Episode IV, the Republic is replaced by an Empire. The first hint comes in "Attack of the Clones," when the Senate's Chancellor Palpatine is granted emergency powers to deal with the separatists. It spoils very little to tell you that Palpatine eventually becomes the Emperor. For a time, he keeps the Senate in place, functioning as a rubber-stamp, much like the Roman imperial senate, but a few minutes into Episode IV, we are informed that the he has dissolved the Senate, and that "the last remnants of the Old Republic have been swept away."
Lucas wants the Empire to stand for evil, so he tells us that the Emperor and Darth Vader have gone over to the Dark Side and dresses them in black.
But look closer. When Palpatine is still a senator, he says, "The Republic is not what it once was. The Senate is full of greedy, squabbling delegates. There is no interest in the common good." At one point he laments that "the bureaucrats are in charge now."
Palpatine believes that the political order must be manipulated to produce peace and stability. When he mutters, "There is no civility, there is only politics," we see that at heart, he's an esoteric Straussian.
Make no mistake, as emperor, Palpatine is a dictator--but a relatively benign one, like Pinochet. It's a dictatorship people can do business with. They collect taxes and patrol the skies. They try to stop organized crime (in the form of the smuggling rings run by the Hutts). The Empire has virtually no effect on the daily life of the average, law-abiding citizen.
Also, unlike the divine-right Jedi, the Empire is a meritocracy. The Empire runs academies throughout the galaxy (Han Solo begins his career at an Imperial academy), and those who show promise are promoted, often rapidly. In "The Empire Strikes Back" Captain Piett is quickly promoted to admiral when his predecessor "falls down on the job."
And while it's a small point, the Empire's manners and decorum speak well of it. When Darth Vader is forced to employ bounty hunters to track down Han Solo, he refuses to address them by name. Even Boba Fett, the greatest of all trackers, is referred to icily as "bounty hunter." And yet Fett understands the protocol. When he captures Solo, he calls him "Captain Solo." (Whether this is in deference to Han's former rank in the Imperial starfleet, or simply because Han owns and pilots his own ship, we don't know. I suspect it's the former.)
But the most compelling evidence that the Empire isn't evil comes in "The Empire Strikes Back" when Darth Vader is battling Luke Skywalker. After an exhausting fight, Vader is poised to finish Luke off, but he stays his hand. He tries to convert Luke to the Dark Side with this simple plea: "There is no escape. Don't make me destroy you. . . . Join me, and I will complete your training. With our combined strength, we can end this destructive conflict and bring order to the galaxy." It is here we find the real controlling impulse for the Dark Side and the Empire. The Empire doesn't want slaves or destruction or "evil." It wants order.
None of which is to say that the Empire isn't sometimes brutal. In Episode IV, Imperial stormtroopers kill Luke's aunt and uncle and Grand Moff Tarkin orders the destruction of an entire planet, Alderaan. But viewed in context, these acts are less brutal than they initially appear. Poor Aunt Beru and Uncle Owen reach a grisly end, but only after they aid the rebellion by hiding Luke and harboring two fugitive droids. They aren't given due process, but they are traitors.
The destruction of Alderaan is often cited as ipso facto proof of the Empire's "evilness" because it seems like mass murder--planeticide, even. As Tarkin prepares to fire the Death Star, Princess Leia implores him to spare the planet, saying, "Alderaan is peaceful. We have no weapons." Her plea is important, if true.
But the audience has no reason to believe that Leia is telling the truth. In Episode IV, every bit of information she gives the Empire is willfully untrue. In the opening, she tells Darth Vader that she is on a diplomatic mission of mercy, when in fact she is on a spy mission, trying to deliver schematics of the Death Star to the Rebel Alliance. When asked where the Alliance is headquartered, she lies again.
Leia's lies are perfectly defensible--she thinks she's serving the greater good--but they make her wholly unreliable on the question of whether or not Alderaan really is peaceful and defenseless. If anything, since Leia is a high-ranking member of the rebellion and the princess of Alderaan, it would be reasonable to suspect that Alderaan is a front for Rebel activity or at least home to many more spies and insurgents like Leia.
Whatever the case, the important thing to recognize is that the Empire is not committing random acts of terror. It is engaged in a fight for the survival of its regime against a violent group of rebels who are committed to its destruction.
III. After the Rebellion
As we all know from the final Star Wars installment, "Return of the Jedi," the rebellion is eventually successful. The Emperor is assassinated, Darth Vader abdicates his post and dies, the central governing apparatus of the Empire is destroyed in a spectacular space battle, and the rebels rejoice with their small, annoying Ewok friends. But what happens next?
(There is a raft of literature on this point, but, as I said at the beginning, I'm going to ignore it because it doesn't speak to Lucas's original intent.)
In Episode IV, after Grand Moff Tarkin announces that the Imperial Senate has been abolished, he's asked how the Emperor can possibly hope to keep control of the galaxy. "The regional governors now have direct control over territories," he says. "Fear will keep the local systems in line."
So under Imperial rule, a large group of regional potentates, each with access to a sizable army and star destroyers, runs local affairs. These governors owe their fealty to the Emperor. And once the Emperor is dead, the galaxy will be plunged into chaos.
In all of the time we spend observing the Rebel Alliance, we never hear of their governing strategy or their plans for a post-Imperial universe. All we see are plots and fighting. Their victory over the Empire doesn't liberate the galaxy--it turns the galaxy into Somalia writ large: dominated by local warlords who are answerable to no one.
Which makes the rebels--Lucas's heroes--an unimpressive crew of anarchic royals who wreck the galaxy so that Princess Leia can have her tiara back.
I'll take the Empire.
Jonathan V. Last is online editor of The Weekly Standard.
© Copyright 2005, News Corporation, Weekly Standard, All Rights Reserved.
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TOPICS: Extended News; News/Current Events; Click to Add Topic
KEYWORDS: STARWARS; Click to Add Keyword
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1 posted on 04/26/2005 8:29:56 AM PDT by Jimmyclyde
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To: Logos124
An oldie but goodie...
2 posted on 04/26/2005 8:30:39 AM PDT by Jimmyclyde (Dying ain't much of a living boy...)
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To: MadIvan
Ping.
3 posted on 04/26/2005 8:35:56 AM PDT by untenured
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weeklystandard.com ^ | Johnathan V. Last
Posted on 04/26/2005 8:29:53 AM PDT by Jimmyclyde
The Case for the Empire From the May 16, 2002 Daily Standard: Everything you think you know about Star Wars is wrong. by Jonathan V. Last 12/26/2002 12:00:00 AM
Jonathan V. Last, online editor
STAR WARS RETURNS today with its fifth installment, "Attack of the Clones." There will be talk of the Force and the Dark Side and the epic morality of George Lucas's series. But the truth is that from the beginning, Lucas confused the good guys with the bad. The deep lesson of Star Wars is that the Empire is good.
It's a difficult leap to make--embracing Darth Vader and the Emperor over the plucky and attractive Luke Skywalker and Princess Leia--but a careful examination of the facts, sorted apart from Lucas's off-the-shelf moral cues, makes a quite convincing case.
First, an aside: For the sake of this discussion, I've considered only the history gleaned from the actual Star Wars films, not the Expanded Universe. If you know what the Expanded Universe is and want to argue that no discussion of Star Wars can be complete without considering material outside the canon, that's fine. However, it's always been my view that the comic books and novels largely serve to clean up Lucas's narrative and philosophical messes. Therefore, discussions of intrinsic intent must necessarily revolve around the movies alone. You may disagree, but please don't e-mail me about it.
If you don't know what the Expanded Universe is, well, uh, neither do I.
I. The Problems with the Galactic Republic
At the beginning of the Star Wars saga, the known universe is governed by the Galactic Republic. The Republic is controlled by a Senate, which is, in turn, run by an elected chancellor who's in charge of procedure, but has little real power.
Scores of thousands of planets are represented in the Galactic Senate, and as we first encounter it, it is sclerotic and ineffectual. The Republic has grown over many millennia to the point where there are so many factions and disparate interests, that it is simply too big to be governable. Even the Republic's staunchest supporters recognize this failing: In "The Phantom Menace," Queen Amidala admits, "It is clear to me now that the Republic no longer functions." In "Attack of the Clones," young Anakin Skywalker observes that it simply "doesn't work."
The Senate moves so slowly that it is powerless to stop aggression between member states. In "The Phantom Menace" a supra-planetary alliance, the Trade Federation (think of it as OPEC to the Galactic Republic's United Nations), invades a planet and all the Senate can agree to do is call for an investigation.
Like the United Nations, the Republic has no armed forces of its own, but instead relies on a group of warriors, the Jedi knights, to "keep the peace." The Jedi, while autonomous, often work in tandem with the Senate, trying to smooth over quarrels and avoid conflicts. But the Jedi number only in the thousands--they cannot protect everyone.
What's more, it's not clear that they should be "protecting" anyone. The Jedi are Lucas's great heroes, full of Zen wisdom and righteous power. They encourage people to "use the Force"--the mystical energy which is the source of their power--but the truth, revealed in "The Phantom Menace," is that the Force isn't available to the rabble. The Force comes from midi-chlorians, tiny symbiotic organisms in people's blood, like mitochondria. The Force, it turns out, is an inherited, genetic trait. If you don't have the blood, you don't get the Force. Which makes the Jedi not a democratic militia, but a royalist Swiss guard.
And an arrogant royalist Swiss guard, at that. With one or two notable exceptions, the Jedi we meet in Star Wars are full of themselves. They ignore the counsel of others (often with terrible consequences), and seem honestly to believe that they are at the center of the universe. When the chief Jedi record-keeper is asked in "Attack of the Clones" about a planet she has never heard of, she replies that if it's not in the Jedi archives, it doesn't exist. (The planet in question does exist, again, with terrible consequences.)
In "Attack of the Clones," a mysterious figure, Count Dooku, leads a separatist movement of planets that want to secede from the Republic. Dooku promises these confederates smaller government, unlimited free trade, and an "absolute commitment to capitalism." Dooku's motives are suspect--it's not clear whether or not he believes in these causes. However, there's no reason to doubt the motives of the other separatists--they seem genuinely to want to make a fresh start with a government that isn't bloated and dysfunctional.
The Republic, of course, is eager to quash these separatists, but they never make a compelling case--or any case, for that matter--as to why, if they are such a freedom-loving regime, these planets should not be allowed to check out of the Republic and take control of their own destinies.
II. The Empire
We do not yet know the exact how's and why's, but we do know this: At some point between the end of Episode II and the beginning of Episode IV, the Republic is replaced by an Empire. The first hint comes in "Attack of the Clones," when the Senate's Chancellor Palpatine is granted emergency powers to deal with the separatists. It spoils very little to tell you that Palpatine eventually becomes the Emperor. For a time, he keeps the Senate in place, functioning as a rubber-stamp, much like the Roman imperial senate, but a few minutes into Episode IV, we are informed that the he has dissolved the Senate, and that "the last remnants of the Old Republic have been swept away."
Lucas wants the Empire to stand for evil, so he tells us that the Emperor and Darth Vader have gone over to the Dark Side and dresses them in black.
But look closer. When Palpatine is still a senator, he says, "The Republic is not what it once was. The Senate is full of greedy, squabbling delegates. There is no interest in the common good." At one point he laments that "the bureaucrats are in charge now."
Palpatine believes that the political order must be manipulated to produce peace and stability. When he mutters, "There is no civility, there is only politics," we see that at heart, he's an esoteric Straussian.
Make no mistake, as emperor, Palpatine is a dictator--but a relatively benign one, like Pinochet. It's a dictatorship people can do business with. They collect taxes and patrol the skies. They try to stop organized crime (in the form of the smuggling rings run by the Hutts). The Empire has virtually no effect on the daily life of the average, law-abiding citizen.
Also, unlike the divine-right Jedi, the Empire is a meritocracy. The Empire runs academies throughout the galaxy (Han Solo begins his career at an Imperial academy), and those who show promise are promoted, often rapidly. In "The Empire Strikes Back" Captain Piett is quickly promoted to admiral when his predecessor "falls down on the job."
And while it's a small point, the Empire's manners and decorum speak well of it. When Darth Vader is forced to employ bounty hunters to track down Han Solo, he refuses to address them by name. Even Boba Fett, the greatest of all trackers, is referred to icily as "bounty hunter." And yet Fett understands the protocol. When he captures Solo, he calls him "Captain Solo." (Whether this is in deference to Han's former rank in the Imperial starfleet, or simply because Han owns and pilots his own ship, we don't know. I suspect it's the former.)
But the most compelling evidence that the Empire isn't evil comes in "The Empire Strikes Back" when Darth Vader is battling Luke Skywalker. After an exhausting fight, Vader is poised to finish Luke off, but he stays his hand. He tries to convert Luke to the Dark Side with this simple plea: "There is no escape. Don't make me destroy you. . . . Join me, and I will complete your training. With our combined strength, we can end this destructive conflict and bring order to the galaxy." It is here we find the real controlling impulse for the Dark Side and the Empire. The Empire doesn't want slaves or destruction or "evil." It wants order.
None of which is to say that the Empire isn't sometimes brutal. In Episode IV, Imperial stormtroopers kill Luke's aunt and uncle and Grand Moff Tarkin orders the destruction of an entire planet, Alderaan. But viewed in context, these acts are less brutal than they initially appear. Poor Aunt Beru and Uncle Owen reach a grisly end, but only after they aid the rebellion by hiding Luke and harboring two fugitive droids. They aren't given due process, but they are traitors.
The destruction of Alderaan is often cited as ipso facto proof of the Empire's "evilness" because it seems like mass murder--planeticide, even. As Tarkin prepares to fire the Death Star, Princess Leia implores him to spare the planet, saying, "Alderaan is peaceful. We have no weapons." Her plea is important, if true.
But the audience has no reason to believe that Leia is telling the truth. In Episode IV, every bit of information she gives the Empire is willfully untrue. In the opening, she tells Darth Vader that she is on a diplomatic mission of mercy, when in fact she is on a spy mission, trying to deliver schematics of the Death Star to the Rebel Alliance. When asked where the Alliance is headquartered, she lies again.
Leia's lies are perfectly defensible--she thinks she's serving the greater good--but they make her wholly unreliable on the question of whether or not Alderaan really is peaceful and defenseless. If anything, since Leia is a high-ranking member of the rebellion and the princess of Alderaan, it would be reasonable to suspect that Alderaan is a front for Rebel activity or at least home to many more spies and insurgents like Leia.
Whatever the case, the important thing to recognize is that the Empire is not committing random acts of terror. It is engaged in a fight for the survival of its regime against a violent group of rebels who are committed to its destruction.
III. After the Rebellion
As we all know from the final Star Wars installment, "Return of the Jedi," the rebellion is eventually successful. The Emperor is assassinated, Darth Vader abdicates his post and dies, the central governing apparatus of the Empire is destroyed in a spectacular space battle, and the rebels rejoice with their small, annoying Ewok friends. But what happens next?
(There is a raft of literature on this point, but, as I said at the beginning, I'm going to ignore it because it doesn't speak to Lucas's original intent.)
In Episode IV, after Grand Moff Tarkin announces that the Imperial Senate has been abolished, he's asked how the Emperor can possibly hope to keep control of the galaxy. "The regional governors now have direct control over territories," he says. "Fear will keep the local systems in line."
So under Imperial rule, a large group of regional potentates, each with access to a sizable army and star destroyers, runs local affairs. These governors owe their fealty to the Emperor. And once the Emperor is dead, the galaxy will be plunged into chaos.
In all of the time we spend observing the Rebel Alliance, we never hear of their governing strategy or their plans for a post-Imperial universe. All we see are plots and fighting. Their victory over the Empire doesn't liberate the galaxy--it turns the galaxy into Somalia writ large: dominated by local warlords who are answerable to no one.
Which makes the rebels--Lucas's heroes--an unimpressive crew of anarchic royals who wreck the galaxy so that Princess Leia can have her tiara back.
I'll take the Empire.
Jonathan V. Last is online editor of The Weekly Standard.
© Copyright 2005, News Corporation, Weekly Standard, All Rights Reserved.
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TOPICS: Extended News; News/Current Events; Click to Add Topic
KEYWORDS: STARWARS; Click to Add Keyword
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1 posted on 04/26/2005 8:29:56 AM PDT by Jimmyclyde
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To: Logos124
An oldie but goodie...
2 posted on 04/26/2005 8:30:39 AM PDT by Jimmyclyde (Dying ain't much of a living boy...)
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To: MadIvan
Ping.
3 posted on 04/26/2005 8:35:56 AM PDT by untenured
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Now with B16!The Curt Jester ^ 4/21/05 Jeff Miller
Posted on 04/21/2005 1:43:23 PM PDT by Atheist2Theist
You might have been told in the past that Humanae Vitaemins were not good for you or that if your conscience decided you didn't need Humanae Vitaemins you could safely ignore them. Latest cultural medical studies have proven the link between lack of Humanae Vitaemins and the lack of children. These studies show the extreme cultural malnutrition from not getting their *RDA of required spiritual nutrition.
Now with B16, Ut Unum Sintrum, has all the required nutrients you have relied on in the past and more. B16 works well with and expands with needed intake daily intake such as VII and JP2 (Beta-Karoltene) and will not interfere in any way them. In fact the synergetic effect will only enhance your spiritual metabolism.
The B16 caplets have a special smooth coating allowing you to swallow them without any water. Yet it is true with B16 you do not have to water it down in any way. Our B16 is doctrinally pure with no heretical impurities such as those found in anti-Humanae Vitaemins.
Studies have conclusively proven that people taking B16 daily will continue to have smooth running and orthodox metabolism for years to come. B16 in trials has proven not to be harsh or difficult as had been initially reported.
We are also introducing Ut Unum Sintrum for children since your children our never too young to start off with proper spiritual growth. Parents will be pleased to know that our Humanae Vitaemins are not sugar coated, just like everything else we offer with B16 in it. Guaranteed not to cause truth decay or any form of spiritual rot. The children's tablets come in fun shapes like German Shepherds and Rottweilers.
*Ratzinger Daily Allowance
Disclaimer: B16 is not a miracle drug and will not remove any crosses you might bear. Though clinical trials have shown that a steady diet of truth supplemented with B16 will enable you better to embrace your cross and to carry it daily. For best results please use B16 with plenty of prayer and thanks be to God.
Caution: B16 has been known to cause allergies, shrill behavior, and coughing fits to some theologians, clergy, religious, and laity. Especially those who have had Spirit of Vatican Flu in the past.
Tell your health care provider if you are dissident and they can help you overcome your deficient diet and prepare you for true health with full dosages of B16. Or contact your local Orthodoxpedic surgeon for further information.
TOPICS: Humor; ReligionKEYWORDS:
1 posted on 04/21/2005 1:43:24 PM PDT by Atheist2Theist
[ Post Reply Private Reply View Replies ]
To: Atheist2Theist
Please, Mister, please - don't play B17...
2 posted on 04/21/2005 2:03:42 PM PDT by Hegemony Cricket (I have learned to deal with change. Any possibility of letting me try some currency?)
[ Post Reply Private Reply To 1 View Replies ]
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
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Now with B16!The Curt Jester ^ 4/21/05 Jeff Miller
Posted on 04/21/2005 1:43:23 PM PDT by Atheist2Theist
You might have been told in the past that Humanae Vitaemins were not good for you or that if your conscience decided you didn't need Humanae Vitaemins you could safely ignore them. Latest cultural medical studies have proven the link between lack of Humanae Vitaemins and the lack of children. These studies show the extreme cultural malnutrition from not getting their *RDA of required spiritual nutrition.
Now with B16, Ut Unum Sintrum, has all the required nutrients you have relied on in the past and more. B16 works well with and expands with needed intake daily intake such as VII and JP2 (Beta-Karoltene) and will not interfere in any way them. In fact the synergetic effect will only enhance your spiritual metabolism.
The B16 caplets have a special smooth coating allowing you to swallow them without any water. Yet it is true with B16 you do not have to water it down in any way. Our B16 is doctrinally pure with no heretical impurities such as those found in anti-Humanae Vitaemins.
Studies have conclusively proven that people taking B16 daily will continue to have smooth running and orthodox metabolism for years to come. B16 in trials has proven not to be harsh or difficult as had been initially reported.
We are also introducing Ut Unum Sintrum for children since your children our never too young to start off with proper spiritual growth. Parents will be pleased to know that our Humanae Vitaemins are not sugar coated, just like everything else we offer with B16 in it. Guaranteed not to cause truth decay or any form of spiritual rot. The children's tablets come in fun shapes like German Shepherds and Rottweilers.
*Ratzinger Daily Allowance
Disclaimer: B16 is not a miracle drug and will not remove any crosses you might bear. Though clinical trials have shown that a steady diet of truth supplemented with B16 will enable you better to embrace your cross and to carry it daily. For best results please use B16 with plenty of prayer and thanks be to God.
Caution: B16 has been known to cause allergies, shrill behavior, and coughing fits to some theologians, clergy, religious, and laity. Especially those who have had Spirit of Vatican Flu in the past.
Tell your health care provider if you are dissident and they can help you overcome your deficient diet and prepare you for true health with full dosages of B16. Or contact your local Orthodoxpedic surgeon for further information.
TOPICS: Humor; ReligionKEYWORDS:
1 posted on 04/21/2005 1:43:24 PM PDT by Atheist2Theist
[ Post Reply Private Reply View Replies ]
To: Atheist2Theist
Please, Mister, please - don't play B17...
2 posted on 04/21/2005 2:03:42 PM PDT by Hegemony Cricket (I have learned to deal with change. Any possibility of letting me try some currency?)
[ Post Reply Private Reply To 1 View Replies ]
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
Free RepublicHome · Browse · Search
Bloggers & PersonalTopics · Post Article
FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2003 Robinson-DeFehr Consulting, LLC.
Tuesday, March 22, 2005
Monday, March 21, 2005
Sunday, March 20, 2005
Saturday, January 22, 2005
George Bush
La tercera revolución americana
Álvaro Martín
Recomiéndenos Volver
“ Siempre se ha dicho que George W. Bush emula a Ronald Reagan. Es mucho más claro para mí que un vínculo más profundo aún le une a Abraham Lincoln ”
El día había amanecido como los anteriores en Washington. Gris, lluvioso y gélido. El Presidente había despachado algunos asuntos antes de dirigirse al Congreso, donde también mantuvo contactos con senadores de ambos partidos. Después se encaminó a la balconada del ala Este del Capitolio donde juraría su cargo con la misma fórmula utilizada por George Washington el 30 de abril de 1789. El Presidente tomó asiento en la tribuna de oradores junto a su esposa. Continuaba lloviendo. Mary vio como su marido erguía sus 190 centímetros de estatura para aproximarse al podio desde donde se dirigiría al pueblo americano aquel 4 de marzo de 1865. En ese momento, el sol desgarró el velo de nubes y explotó en un paroxismo de luz sobre Abraham Lincoln. Lo que siguió fue la oración política más dramática y trascendental de la historia, cuarenta y un días antes de que el 16º Presidente abandonara ésta para alojarse por siempre en el corazón de los americanos por y para quienes él había salvado la Unión.
En 1861 el único contacto de un ciudadano americano con el Gobierno federal era el servicio postal. El dólar no existió hasta 1863. El ferrocarril transcontinental se ultimó en esa época. La expansión de la enseñanza superior data de entonces. EEUU fue creado por los Padres Fundadores, pero Abraham Lincoln alumbró la nación americana en una lucha titánica por la libertad, para que aquel país “concebido en libertad y dedicado a la proposición de que todos los hombres son creados iguales” “no pereciera de la faz de la tierra”. EEUU se conjugaba en plural hasta 1863. Hasta que Lincoln en Gettysburg conjuró los primeros vagidos de “un renacimiento de la libertad” para su nación.
¿Cuál era la última ratio de la Segunda Revolución Americana operada por Abraham Lincoln? En sus propias palabras de nuevo: “Al dar la libertad al esclavo, aseguramos la libertad del libre, igualmente honorables en aquello que concedemos y en aquello que preservamos”. 140 años después tenía que ser George W. Bush quien, en la alocución más emocionante y significativa de los últimos cuarenta años, fuera a afirmar lo mismo en medio de una guerra donde se dirime también “si esa nación, o cualquier nación, así concebida (en libertad) y así dedicada (a la igualdad)” puede sobrevivir.
Siempre se ha dicho que George W. Bush emula a Ronald Reagan. Es mucho más claro para mí que un vínculo más profundo aún le une a Abraham Lincoln. En agosto pasado publiqué un artículo en el diario ABC donde comparaba la situación electoral de Bush en esos días con la de Lincoln en el verano de 1864. La realidad es que los paralelismos van mucho más allá. George W. Bush inició el 20 de enero, con su Segundo Discurso Inaugural, la Tercera Revolución Americana, como Lincoln iniciara la Segunda el 1 de enero de 1863 con el Decreto de Emancipación”. EE UU es ahora, de nuevo, una potencia revolucionaria.
George W. Bush proclamó: "la supervivencia de la libertad en esta tierra depende de la supervivencia de la libertad en otras. La mejor esperanza de paz en nuestro mundo es la expansión de la libertad en todo el mundo"; es decir, la misma idea de Lincoln sobre la lucha por la libertad de los que no la tienen como forma de garantizar la nuestra. Y añadió: "Es la política de EEUU apoyar la aparición de movimientos democráticos en toda nación y cultura, con el fin último de terminar con la tiranía en el mundo". Esta idea, la destrucción de la tiranía, es tan manuifiestamente lincolniana que el Presidente Bush la citó explícitamente en su discurso: "Aquellos que niegan la libertad a otros no la merecen para sí; y, en la ley de un Dios justo, no pueden retenerla".
George W. Bush no empezó esta guerra, pero aceptó el desafío de defender la libertad (de nuevo Lincoln: "...un bando haría la guerra antes que dejar que la nación sobreviviera; el otro aceptaría la guerra antes que dejarla perecer"). Lincoln no empezó la Guerra Civil pero la aceptó para defender a la nación. Lincoln no se proponía abolir la esclavitud, sino restablecer el statu quo ante. Pero en 1862 la Guerra se convirtió en una Guerra revolucionaria de emancipación, cuando la fuerza del principio moral intersectó con la necesidad militar de quebrar las bases económicas de la potencia esclavista.
El 20 de enero de 2005, el Presidente Bush convirtió la Guerra contra el Terror, una guerra empezada por la seguridad, en una Guerra Revolucionaria de Liberación ("EEUU no fingirá que los disidentes encarcelados prefieren sus cadenas o que las mujeres desean su humillación y servidumbre...Aquellos que viven bajo la tiranía sabrán que EEUU no ignorará vuestra opresión ni excusará a vuestros opresores"). Y por la misma razón que Lincoln: la esclavitud de uno amenaza la libertad de todos.
El día había amanecido gris, con ráfagas de viento y nieve en Washington. Pero para cuando hubo abandonado la tribuna del ala este del Congreso, George W. Bush había completado una transformación lincolniana que quienes tenemos fe en la dignidad y la decencia del 43 Presidente siempre supimos que daría. Él es ahora the last, best hope of earth.
La tercera revolución americana
Álvaro Martín
Recomiéndenos Volver
“ Siempre se ha dicho que George W. Bush emula a Ronald Reagan. Es mucho más claro para mí que un vínculo más profundo aún le une a Abraham Lincoln ”
El día había amanecido como los anteriores en Washington. Gris, lluvioso y gélido. El Presidente había despachado algunos asuntos antes de dirigirse al Congreso, donde también mantuvo contactos con senadores de ambos partidos. Después se encaminó a la balconada del ala Este del Capitolio donde juraría su cargo con la misma fórmula utilizada por George Washington el 30 de abril de 1789. El Presidente tomó asiento en la tribuna de oradores junto a su esposa. Continuaba lloviendo. Mary vio como su marido erguía sus 190 centímetros de estatura para aproximarse al podio desde donde se dirigiría al pueblo americano aquel 4 de marzo de 1865. En ese momento, el sol desgarró el velo de nubes y explotó en un paroxismo de luz sobre Abraham Lincoln. Lo que siguió fue la oración política más dramática y trascendental de la historia, cuarenta y un días antes de que el 16º Presidente abandonara ésta para alojarse por siempre en el corazón de los americanos por y para quienes él había salvado la Unión.
En 1861 el único contacto de un ciudadano americano con el Gobierno federal era el servicio postal. El dólar no existió hasta 1863. El ferrocarril transcontinental se ultimó en esa época. La expansión de la enseñanza superior data de entonces. EEUU fue creado por los Padres Fundadores, pero Abraham Lincoln alumbró la nación americana en una lucha titánica por la libertad, para que aquel país “concebido en libertad y dedicado a la proposición de que todos los hombres son creados iguales” “no pereciera de la faz de la tierra”. EEUU se conjugaba en plural hasta 1863. Hasta que Lincoln en Gettysburg conjuró los primeros vagidos de “un renacimiento de la libertad” para su nación.
¿Cuál era la última ratio de la Segunda Revolución Americana operada por Abraham Lincoln? En sus propias palabras de nuevo: “Al dar la libertad al esclavo, aseguramos la libertad del libre, igualmente honorables en aquello que concedemos y en aquello que preservamos”. 140 años después tenía que ser George W. Bush quien, en la alocución más emocionante y significativa de los últimos cuarenta años, fuera a afirmar lo mismo en medio de una guerra donde se dirime también “si esa nación, o cualquier nación, así concebida (en libertad) y así dedicada (a la igualdad)” puede sobrevivir.
Siempre se ha dicho que George W. Bush emula a Ronald Reagan. Es mucho más claro para mí que un vínculo más profundo aún le une a Abraham Lincoln. En agosto pasado publiqué un artículo en el diario ABC donde comparaba la situación electoral de Bush en esos días con la de Lincoln en el verano de 1864. La realidad es que los paralelismos van mucho más allá. George W. Bush inició el 20 de enero, con su Segundo Discurso Inaugural, la Tercera Revolución Americana, como Lincoln iniciara la Segunda el 1 de enero de 1863 con el Decreto de Emancipación”. EE UU es ahora, de nuevo, una potencia revolucionaria.
George W. Bush proclamó: "la supervivencia de la libertad en esta tierra depende de la supervivencia de la libertad en otras. La mejor esperanza de paz en nuestro mundo es la expansión de la libertad en todo el mundo"; es decir, la misma idea de Lincoln sobre la lucha por la libertad de los que no la tienen como forma de garantizar la nuestra. Y añadió: "Es la política de EEUU apoyar la aparición de movimientos democráticos en toda nación y cultura, con el fin último de terminar con la tiranía en el mundo". Esta idea, la destrucción de la tiranía, es tan manuifiestamente lincolniana que el Presidente Bush la citó explícitamente en su discurso: "Aquellos que niegan la libertad a otros no la merecen para sí; y, en la ley de un Dios justo, no pueden retenerla".
George W. Bush no empezó esta guerra, pero aceptó el desafío de defender la libertad (de nuevo Lincoln: "...un bando haría la guerra antes que dejar que la nación sobreviviera; el otro aceptaría la guerra antes que dejarla perecer"). Lincoln no empezó la Guerra Civil pero la aceptó para defender a la nación. Lincoln no se proponía abolir la esclavitud, sino restablecer el statu quo ante. Pero en 1862 la Guerra se convirtió en una Guerra revolucionaria de emancipación, cuando la fuerza del principio moral intersectó con la necesidad militar de quebrar las bases económicas de la potencia esclavista.
El 20 de enero de 2005, el Presidente Bush convirtió la Guerra contra el Terror, una guerra empezada por la seguridad, en una Guerra Revolucionaria de Liberación ("EEUU no fingirá que los disidentes encarcelados prefieren sus cadenas o que las mujeres desean su humillación y servidumbre...Aquellos que viven bajo la tiranía sabrán que EEUU no ignorará vuestra opresión ni excusará a vuestros opresores"). Y por la misma razón que Lincoln: la esclavitud de uno amenaza la libertad de todos.
El día había amanecido gris, con ráfagas de viento y nieve en Washington. Pero para cuando hubo abandonado la tribuna del ala este del Congreso, George W. Bush había completado una transformación lincolniana que quienes tenemos fe en la dignidad y la decencia del 43 Presidente siempre supimos que daría. Él es ahora the last, best hope of earth.
Tuesday, December 21, 2004
The Monetary Economics of Thurston Howell III
by B.K. Marcus
[Posted August 31, 2004]
Gilligan's Island is now out on DVD, reawakening the unanswered questions of childhood: why does the Skipper let Gilligan help with anything when he knows he'll just screw it up? Why did the movie star take a day cruise in an evening gown? Why did two of the richest people in the world board a dinky boat with the hoi polloi instead of leasing a private yacht? And why do any of the other stranded castaways treat the millionaire's government money as valuable while stuck on an island where no such government can enforce its value?
Because it's just a dumb TV show.
But that last question stuck with me. Would fiat dollars be treated as valuable without the government around to enforce its fiat? My impression in childhood was that money belonged to the government, was inextricably bound to the government, and we, the citizens of the government, were just using the money "on loan" so to speak. This impression came not only from the look of the money itself, but from American history, as children's cartoons had communicated it to me. (One Scooby Doo episode ends with the hidden "treasure" turning out to be a case full of hoarded and now worthless Confederate dollars.)
A Brief Monetary History of Gilligan's Island
In early episodes, we see Mr. Howell hiring various services from other castaways. We eventually learn he's been writing checks on a mainland (and therefore inaccessible) bank. This works while the group consider their condition temporary, but the checks are quickly devalued and eliminated when the castaways begin to prepare for the possibility of an indefinite stay on the island.
In Episode 9, "The Big Gold Strike," Gilligan and Mr. Howell find a gold mine on the island, which Howell convinces Gilligan to keep secret from the others. By the time everyone learns about the mine, Howell has already taken the lion's share of the most easily accessible gold. He'd like to hoard it for himself, but the other castaways begin charging him for their goods and services. Soon everyone has a small fortune in gold, which they all try to smuggle aboard a tiny escape raft. Their collected wealth, of course, ends up at the bottom of the lagoon.
In later episodes, monetary exchange takes place in US paper currency. Was it impossible to recover the gold from the lagoon? Perhaps the writers found it more convenient to deal in the money the television viewers themselves were most familiar with. We might dismiss this as economic naivete on the part of the writers, but recent history provides evidence that fiat paper can, in fact, outlive its government. Not only that, but post-fiat money -- dead government currency -- can out-compete American greenbacks!
Undead Money
After the invasion of Iraq, there was no more central bank printing dinars and no more Iraqi government to put the fiat behind its fiat currency. The American military started handing out US$20 bills and expected the Dinar to fade from existence. Instead, to the chagrin of the occupation force, the Dinar's value doubled against the Dollar in two weeks. Statues of Saddam Hussein were being toppled, but his face was still on the preferred currency, and gaining in popularity. Some saw this as patriotism: a silent protest by the occupied population against the invading force. But we need only look further north, to the Kurd-controlled areas, to find a more economic explanation.
After the first Gulf War, Iraq changed its currency from the so-called Swiss Dinar to the more recent Saddam Dinar. When a government changes its fiat currency, it announces a transition period during which the old bills can be brought in and exchanged for the new. After the window closes, the old notes are declared worthless.
To no one's surprise, the rebel Kurds did not visit the Iraqi government to make such an exchange. They just kept using the old money. It was familiar, hard to counterfeit, and in its post-fiat status, it was no longer inflationary: that is to say, the relatively fixed supply of notes made the currency a better store of value than the new Saddam dinars being printed (and printed and printed) further south.
The Swiss Dinar may have been the first successful post-fiat money.
For a brief period after the invasion -- the time it took the Occupation Authority to reestablish an Iraqi central bank and start printing new dinars -- the old Saddam dinars joined the older Swiss dinars in their post-fiat status. And lo and behold, Saddam's dead dinars rose in value compared to the inflationary dollars of the occupation force.
But how can this be? A money backed only by the force of the State is backed by literally nothing in the absence of that state. And yet the dinars continued to change hands.
By the end of the year, however, the occupation government was printing new dinars, at first with Saddam still on them (for familiarity), then transitioning into something that resembled the Swiss Dinar (to promote confidence). The brief, unplanned experiment in post-fiat monetary theory was over, but the results were unambiguous: a stable money, even a completely unbacked currency, beats out inflationary government paper in both value and marketability.
While it may seem that Gilligan's fellow castaways would reject Howell's dollars as worthless, the case of the Saddam Dinar (and the Swiss Dinar before it) offers evidence in favor of "worthless paper."
For an understanding of the afterlife of government currency, we need briefly to review the history and theory of money itself.
Direct & Indirect Exchange
Money arises naturally out of barter. This isn't just a historical fact but was theoretically proven by Ludwig von Mises in his Theory of Money and Credit: money can only have developed from barter.
Imagine Gilligan's Island without the Howells and their paper dollars. Without money, commodities exchange directly: coconuts for fish, fish for bamboo, etc. But even with barter, some commodities are more "marketable" than others. Perhaps one of the castaways might eventually buy one of the Professor's books, but they will more often purchase Mary Ann's coconut cream pies -- or the coconuts themselves. Coconuts are more marketable than books.
Over time, the commodity that is most marketable becomes popular for indirect exchange: the Skipper trades his fish for Ginger's decorative shells, not because he wants shells, but because he knows he can trade them for Gilligan's coconuts. The price of a commodity is its exchange ratio for the most marketable good, e.g., 12 shells per coconut. The value of the shell money is based on the goods it traded for yesterday -- since we can't know what prices will be today. Right now, the Skipper is willing to trade one of his fish for two coconuts, and he knows that Gilligan was recently willing to trade his coconuts for a dozen shells each, therefore the Skipper wants to price his fish at two-dozen shells each: enough to buy two coconuts. Prices can change from day to day, but today's new prices will be based on the prices of other things yesterday.
Government Paper
Exchanges that started in barter evolve toward a common money currency -- decorative shells, in this example (and also in the more historical examples of trade among coastal Africans and North American Indians). Now suppose the Professor found the use of shells to be primitive and irrational -- "a barbarous relic!"
The Professor, having successfully invented many new tools, decides to invent a more rational money. He finds a way to preserve palm leaves and mark them with denominations. The denominations do not represent a claim for a certain number of shells. The numbers refer only to each other and to nothing else, no other commodity. If they have value, it is only because the Professor says they have value.
Would anyone use the Professor's new money?
Any new commodity can come onto the market, but its price will be newly negotiable and its marketability (how many people will trade their goods for it) will be as-yet undetermined. This would be the status of the Professor's new "currency." Its marketability, and therefore its value (as money), would be unknown. Money is, by definition, the most marketable good: that thing which people will most readily accept in trade will also be that thing that fosters indirect exchange. Even if the others wanted to acquire preserved palm leaves, the leaves could not possibly become the most marketable commodity overnight and could therefore not start out as money. If the Professor's leaves become money, it will be through the same barter-based process that made the decorative shells into money. (Notice, however, that if this were to happen, the unit of value would be the physical leaf and not the arbitrary denomination marked on the leaf. There's no reason a bartered leaf marked "1,000" should trade for ten times as much as a bartered leaf marked "100.")
Does this make fiat money impossible? Obviously not, or we wouldn't be using it now, but it does mean that it has to evolve slowly and in discrete stages. Murray Rothbard recounts the process in his book, What Has Government Done to Our Money? At each stage in the transition, from barter to pure commodity money to monopoly coinage to demand deposits to fractionally-backed bank notes to completely unbacked government fiat, the earliest value of the new incarnation is based on the latest value of the older form of money. Today's new money requires yesterday's prices.
Over centuries, governments have taken over money from the market, and in the 20th century, most currencies became unbacked by anything other than the force of the State. But, as we see in the case of post-war Iraq, the fiat history of a currency can serve as the starting point for its post-fiat valuations. The Saddam Dinar doubled its value (measured against the Dollar) in only two weeks, but it couldn't have gotten started without its previous, albeit inflationary and unstable, exchange value. At that point, astonishing as it may seem, no government was necessary to maintain the value of the money. The market can reclaim money from government.
Why did the unbacked paper do better than the US Dollar? Because the quantity of dinars was relatively fixed, while the supply of dollars grew. The law of supply and demand tells us that, all else being equal, a rise in the supply of a thing will lower the price of that thing. The thing, in this case, is the Dollar itself; its "price" is its buying power, which the Iraqis watched erode drastically within days.
This is why the castaways value Thurston Howell's paper dollars: because whatever absurd amount he may have brought with him for "a three-hour tour," that amount is now fixed. Dollars are the most stable currency available on Gilligan's Island, and the government has nothing to do with it. Or rather: the absence of government has everything to do with it. If people are allowed to pick their own preferred money, they will pick whatever holds its value most reliably.
What About Gold?
It would be tempting to see the post-fiat currencies as second-best options, valuable only in the absence of true commodity money, such as gold. But we have to avoid the fallacy of inherent value: gold became the universal money not just through its inherent "money-like virtues" but because, over the centuries, its supply became fairly stable. Platinum, for instance, has all the apparent virtues of gold (and may well exceed gold in at least one virtue: the transportable value-per-unit-weight) but because it is being actively and productively mined, its supply (and therefore its exchange value) is unstable -- for now. Someday, however, if the platinum supply levels off, we gold bugs might jump ship for the higher-valued metal.
So would hard money -- "real money" -- be better for the island economy than the paper dollars Thurston Howell brought with him? Should the castaways have recovered the gold from the lagoon and used it instead of Howell's paper?
Actually, there is reason to believe that the post-fiat dollars of Thurston Howell III would make better money than island gold.
Remember that Howell has already extracted the easiest gold before the other castaways learn of the mine. So what do the others do? They begin charging Howell higher prices for their goods and services. He's free to decline such exchanges, of course, but the pampered millionaire can't live comfortably without help from those around him -- and their help is now very expensive.
Yes, it's just a dumb TV show, but in this case we see the laws of economics accurately portrayed: once the castaways realize they're marooned indefinitely, their economic thinking focuses on the limited resources of the island. As Mises claimed, any fixed amount of money is the correct amount of money for a given economy. Prices will adjust. If the supply of gold money is high, and the available goods and services are few, then prices will be very high in terms of gold. And in this context, the gold money supply isn't fixed: the mine is still there, with who knows how much more gold yet to be extracted. Under an island gold standard, the supply of money might increase at any time, and anticipation of that fact will drive current prices still higher. The money ends up heavier than the goods it trades for.
The government paper in Howell's suitcases, on the other hand, is easy to transport, hard to counterfeit, lighter than gold, and whatever amount of it the millionaire managed to bring with him is the amount there's going to be for a while.
On this isolated island, and in this isolated context, paper beats gold.
Conclusion
None of this is to suggest economic sophistication on the part of the show's creators or writing staff. But Gilligan's Island Economics can provide useful thought experiments for the same reasons Robinson Crusoe Economics has served as a staple of classical and Austrian School economics texts.
One thing Gilligan has, which Crusoe doesn't, is a shared culture with the others on the island. If Robinson Crusoe had been shipwrecked with a chest full of British banknotes, they wouldn't have done him any good. Friday would be more likely to trade for shells or gold than he would for the strange paper.
But on Gilligan's Island (and in the Kurdish rebel territories, and briefly in Baghdad), people who are already used to making their exchanges in slips of unbacked paper can continue to do so profitably without the hand of government. The invisible hand of the market serves them better -- even when dealing in government paper.
------
B.K. Marcus is a freelance writer in Charlottesville, Virginia. His website is www.bkmarcus.com. goldbug@bkMarcus.com. Comment on the blog.
by B.K. Marcus
[Posted August 31, 2004]
Gilligan's Island is now out on DVD, reawakening the unanswered questions of childhood: why does the Skipper let Gilligan help with anything when he knows he'll just screw it up? Why did the movie star take a day cruise in an evening gown? Why did two of the richest people in the world board a dinky boat with the hoi polloi instead of leasing a private yacht? And why do any of the other stranded castaways treat the millionaire's government money as valuable while stuck on an island where no such government can enforce its value?
Because it's just a dumb TV show.
But that last question stuck with me. Would fiat dollars be treated as valuable without the government around to enforce its fiat? My impression in childhood was that money belonged to the government, was inextricably bound to the government, and we, the citizens of the government, were just using the money "on loan" so to speak. This impression came not only from the look of the money itself, but from American history, as children's cartoons had communicated it to me. (One Scooby Doo episode ends with the hidden "treasure" turning out to be a case full of hoarded and now worthless Confederate dollars.)
A Brief Monetary History of Gilligan's Island
In early episodes, we see Mr. Howell hiring various services from other castaways. We eventually learn he's been writing checks on a mainland (and therefore inaccessible) bank. This works while the group consider their condition temporary, but the checks are quickly devalued and eliminated when the castaways begin to prepare for the possibility of an indefinite stay on the island.
In Episode 9, "The Big Gold Strike," Gilligan and Mr. Howell find a gold mine on the island, which Howell convinces Gilligan to keep secret from the others. By the time everyone learns about the mine, Howell has already taken the lion's share of the most easily accessible gold. He'd like to hoard it for himself, but the other castaways begin charging him for their goods and services. Soon everyone has a small fortune in gold, which they all try to smuggle aboard a tiny escape raft. Their collected wealth, of course, ends up at the bottom of the lagoon.
In later episodes, monetary exchange takes place in US paper currency. Was it impossible to recover the gold from the lagoon? Perhaps the writers found it more convenient to deal in the money the television viewers themselves were most familiar with. We might dismiss this as economic naivete on the part of the writers, but recent history provides evidence that fiat paper can, in fact, outlive its government. Not only that, but post-fiat money -- dead government currency -- can out-compete American greenbacks!
Undead Money
After the invasion of Iraq, there was no more central bank printing dinars and no more Iraqi government to put the fiat behind its fiat currency. The American military started handing out US$20 bills and expected the Dinar to fade from existence. Instead, to the chagrin of the occupation force, the Dinar's value doubled against the Dollar in two weeks. Statues of Saddam Hussein were being toppled, but his face was still on the preferred currency, and gaining in popularity. Some saw this as patriotism: a silent protest by the occupied population against the invading force. But we need only look further north, to the Kurd-controlled areas, to find a more economic explanation.
After the first Gulf War, Iraq changed its currency from the so-called Swiss Dinar to the more recent Saddam Dinar. When a government changes its fiat currency, it announces a transition period during which the old bills can be brought in and exchanged for the new. After the window closes, the old notes are declared worthless.
To no one's surprise, the rebel Kurds did not visit the Iraqi government to make such an exchange. They just kept using the old money. It was familiar, hard to counterfeit, and in its post-fiat status, it was no longer inflationary: that is to say, the relatively fixed supply of notes made the currency a better store of value than the new Saddam dinars being printed (and printed and printed) further south.
The Swiss Dinar may have been the first successful post-fiat money.
For a brief period after the invasion -- the time it took the Occupation Authority to reestablish an Iraqi central bank and start printing new dinars -- the old Saddam dinars joined the older Swiss dinars in their post-fiat status. And lo and behold, Saddam's dead dinars rose in value compared to the inflationary dollars of the occupation force.
But how can this be? A money backed only by the force of the State is backed by literally nothing in the absence of that state. And yet the dinars continued to change hands.
By the end of the year, however, the occupation government was printing new dinars, at first with Saddam still on them (for familiarity), then transitioning into something that resembled the Swiss Dinar (to promote confidence). The brief, unplanned experiment in post-fiat monetary theory was over, but the results were unambiguous: a stable money, even a completely unbacked currency, beats out inflationary government paper in both value and marketability.
While it may seem that Gilligan's fellow castaways would reject Howell's dollars as worthless, the case of the Saddam Dinar (and the Swiss Dinar before it) offers evidence in favor of "worthless paper."
For an understanding of the afterlife of government currency, we need briefly to review the history and theory of money itself.
Direct & Indirect Exchange
Money arises naturally out of barter. This isn't just a historical fact but was theoretically proven by Ludwig von Mises in his Theory of Money and Credit: money can only have developed from barter.
Imagine Gilligan's Island without the Howells and their paper dollars. Without money, commodities exchange directly: coconuts for fish, fish for bamboo, etc. But even with barter, some commodities are more "marketable" than others. Perhaps one of the castaways might eventually buy one of the Professor's books, but they will more often purchase Mary Ann's coconut cream pies -- or the coconuts themselves. Coconuts are more marketable than books.
Over time, the commodity that is most marketable becomes popular for indirect exchange: the Skipper trades his fish for Ginger's decorative shells, not because he wants shells, but because he knows he can trade them for Gilligan's coconuts. The price of a commodity is its exchange ratio for the most marketable good, e.g., 12 shells per coconut. The value of the shell money is based on the goods it traded for yesterday -- since we can't know what prices will be today. Right now, the Skipper is willing to trade one of his fish for two coconuts, and he knows that Gilligan was recently willing to trade his coconuts for a dozen shells each, therefore the Skipper wants to price his fish at two-dozen shells each: enough to buy two coconuts. Prices can change from day to day, but today's new prices will be based on the prices of other things yesterday.
Government Paper
Exchanges that started in barter evolve toward a common money currency -- decorative shells, in this example (and also in the more historical examples of trade among coastal Africans and North American Indians). Now suppose the Professor found the use of shells to be primitive and irrational -- "a barbarous relic!"
The Professor, having successfully invented many new tools, decides to invent a more rational money. He finds a way to preserve palm leaves and mark them with denominations. The denominations do not represent a claim for a certain number of shells. The numbers refer only to each other and to nothing else, no other commodity. If they have value, it is only because the Professor says they have value.
Would anyone use the Professor's new money?
Any new commodity can come onto the market, but its price will be newly negotiable and its marketability (how many people will trade their goods for it) will be as-yet undetermined. This would be the status of the Professor's new "currency." Its marketability, and therefore its value (as money), would be unknown. Money is, by definition, the most marketable good: that thing which people will most readily accept in trade will also be that thing that fosters indirect exchange. Even if the others wanted to acquire preserved palm leaves, the leaves could not possibly become the most marketable commodity overnight and could therefore not start out as money. If the Professor's leaves become money, it will be through the same barter-based process that made the decorative shells into money. (Notice, however, that if this were to happen, the unit of value would be the physical leaf and not the arbitrary denomination marked on the leaf. There's no reason a bartered leaf marked "1,000" should trade for ten times as much as a bartered leaf marked "100.")
Does this make fiat money impossible? Obviously not, or we wouldn't be using it now, but it does mean that it has to evolve slowly and in discrete stages. Murray Rothbard recounts the process in his book, What Has Government Done to Our Money? At each stage in the transition, from barter to pure commodity money to monopoly coinage to demand deposits to fractionally-backed bank notes to completely unbacked government fiat, the earliest value of the new incarnation is based on the latest value of the older form of money. Today's new money requires yesterday's prices.
Over centuries, governments have taken over money from the market, and in the 20th century, most currencies became unbacked by anything other than the force of the State. But, as we see in the case of post-war Iraq, the fiat history of a currency can serve as the starting point for its post-fiat valuations. The Saddam Dinar doubled its value (measured against the Dollar) in only two weeks, but it couldn't have gotten started without its previous, albeit inflationary and unstable, exchange value. At that point, astonishing as it may seem, no government was necessary to maintain the value of the money. The market can reclaim money from government.
Why did the unbacked paper do better than the US Dollar? Because the quantity of dinars was relatively fixed, while the supply of dollars grew. The law of supply and demand tells us that, all else being equal, a rise in the supply of a thing will lower the price of that thing. The thing, in this case, is the Dollar itself; its "price" is its buying power, which the Iraqis watched erode drastically within days.
This is why the castaways value Thurston Howell's paper dollars: because whatever absurd amount he may have brought with him for "a three-hour tour," that amount is now fixed. Dollars are the most stable currency available on Gilligan's Island, and the government has nothing to do with it. Or rather: the absence of government has everything to do with it. If people are allowed to pick their own preferred money, they will pick whatever holds its value most reliably.
What About Gold?
It would be tempting to see the post-fiat currencies as second-best options, valuable only in the absence of true commodity money, such as gold. But we have to avoid the fallacy of inherent value: gold became the universal money not just through its inherent "money-like virtues" but because, over the centuries, its supply became fairly stable. Platinum, for instance, has all the apparent virtues of gold (and may well exceed gold in at least one virtue: the transportable value-per-unit-weight) but because it is being actively and productively mined, its supply (and therefore its exchange value) is unstable -- for now. Someday, however, if the platinum supply levels off, we gold bugs might jump ship for the higher-valued metal.
So would hard money -- "real money" -- be better for the island economy than the paper dollars Thurston Howell brought with him? Should the castaways have recovered the gold from the lagoon and used it instead of Howell's paper?
Actually, there is reason to believe that the post-fiat dollars of Thurston Howell III would make better money than island gold.
Remember that Howell has already extracted the easiest gold before the other castaways learn of the mine. So what do the others do? They begin charging Howell higher prices for their goods and services. He's free to decline such exchanges, of course, but the pampered millionaire can't live comfortably without help from those around him -- and their help is now very expensive.
Yes, it's just a dumb TV show, but in this case we see the laws of economics accurately portrayed: once the castaways realize they're marooned indefinitely, their economic thinking focuses on the limited resources of the island. As Mises claimed, any fixed amount of money is the correct amount of money for a given economy. Prices will adjust. If the supply of gold money is high, and the available goods and services are few, then prices will be very high in terms of gold. And in this context, the gold money supply isn't fixed: the mine is still there, with who knows how much more gold yet to be extracted. Under an island gold standard, the supply of money might increase at any time, and anticipation of that fact will drive current prices still higher. The money ends up heavier than the goods it trades for.
The government paper in Howell's suitcases, on the other hand, is easy to transport, hard to counterfeit, lighter than gold, and whatever amount of it the millionaire managed to bring with him is the amount there's going to be for a while.
On this isolated island, and in this isolated context, paper beats gold.
Conclusion
None of this is to suggest economic sophistication on the part of the show's creators or writing staff. But Gilligan's Island Economics can provide useful thought experiments for the same reasons Robinson Crusoe Economics has served as a staple of classical and Austrian School economics texts.
One thing Gilligan has, which Crusoe doesn't, is a shared culture with the others on the island. If Robinson Crusoe had been shipwrecked with a chest full of British banknotes, they wouldn't have done him any good. Friday would be more likely to trade for shells or gold than he would for the strange paper.
But on Gilligan's Island (and in the Kurdish rebel territories, and briefly in Baghdad), people who are already used to making their exchanges in slips of unbacked paper can continue to do so profitably without the hand of government. The invisible hand of the market serves them better -- even when dealing in government paper.
------
B.K. Marcus is a freelance writer in Charlottesville, Virginia. His website is www.bkmarcus.com. goldbug@bkMarcus.com. Comment on the blog.
Wednesday, October 13, 2004
Leading economists have a message for America: “John Kerry favors economic policies that, if implemented, would lead to bigger and more intrusive government and a lower standard of living for the American people.”
That was the conclusion released in a statement Wednesday by 368 economists, including six Nobel laureates: Gary Becker, James Buchanan, Milton Friedman, Robert Lucas, Robert Mundell, and — the winner of this year’s Nobel Prize in Economics — Edward C. Prescott. The economists warned that Sen. Kerry’s policies “would, over time, inhibit capital formation, depress productivity growth, and make the United States less competitive internationally. The end result would be lower U.S. employment and real wage growth.”
Consider Kerry’s spending and tax proposals. Kerry claims he wants to balance the federal budget, but as the Washington Post pointed out last August, “Sen. John F. Kerry’s pledge to reduce record federal budget deficits is colliding with an obstacle that may be growing higher by the week: his own campaign commitments.” In fact, Kerry’s spending proposals would add an estimated $226 billion annually to federal spending. To put this in perspective, $226 billion is roughly equal to the gross domestic products of Greece or Sweden.
Kerry’s oft-repeated budget solution is to raise taxes on “families making over $200,000 on income earned above $200,000 to their levels under President Clinton.” This proposal would generate hundreds-of-billions of dollars over the next decade for the Treasury’s coffers. Kerry’s other proposed tax increases would generate billions more. Yet, these tax increases would offset only a fraction of Kerry’s new spending.
For instance, Senator Kerry’s government-run health insurance spending plan would by itself require a tax increase of more than $1 trillion. Two independent studies, one by the Lewin Group and another by the American Enterprise Institute, concluded that Kerry’s health insurance proposal would cost more than $1 trillion over the next 10 years. And that’s just one of Kerry’s spending proposals. To close the funding gap between all of his spending and tax promises, Kerry would have to raise taxes by an average of $1,431 for everyone who files an income-tax return.
The stark disconnect between Kerry’s spending and tax proposals is what prompted 368 leading economists to conclude, “Kerry’s stated desire to balance the budget and to boost federal spending substantially would almost certainly require far higher and broader tax increases than he has proposed.” And given Kerry’s voting record in the Senate — he has cast 98 votes for tax increases totaling more than $2.3 trillion throughout his legislative career — that is no idle threat.
It is no secret that John Kerry wants America’s foreign policy to be more like that of Germany and France. But perhaps even more disturbing, he has demonstrated that he wants to emulate their failed tax-and-spend economic policies, too. Over time, the consequences could be devastating. Consider the impact those policies have had on Europe. Germany and France once enjoyed standards of living comparable to those of the United States. Today, U.S. per capita GDP is 38 percent higher than that of Germany and 43 percent higher than that of France. Indeed, as economist Bruce Bartlett recently pointed out, “On average, Europeans only live about as well as those in the poorest American state, Mississippi.”
The 368 economists only briefly touched upon Kerry’s trade policies. As it happens, there is not much upon which to comment. Kerry has expressed a general reluctance to reduce trade barriers, and he has promised, if elected, to “review existing trade agreements.” His applause line is that he vows not to “sign any new trade agreements until the review is complete and its recommendations [are] put in place.” According to the 368 economists, “That's a prescription for political gridlock. Given the widespread benefits of unfettered trade, Kerry’s trade policies would harm U.S. producers and consumers alike.”
Finally, we have all heard John Kerry denigrate the present rate of job creation. Yet, according to latest Bureau of Labor Statistics employment report, 1.9 million jobs have been created since August 2003. And at 5.4 percent, the unemployment rate is below the average unemployment rates of the 1970s, 1980s, and 1990s.
We have also heard Kerry’s solemn vow to create 10 million new jobs during his first term as president. But you probably have not heard that the U.S. economy is likely to create about that many jobs over the next four years under current policy.
During the first nine months of 2004 — while Kerry was criticizing the pace of employment growth — payroll employment grew an average of more than 170,000 jobs a month. At that rate, the next administration would preside over the creation of roughly 8.2 million net new jobs. And yet, as Martin Sullivan pointed out in Tax Notes, Kerry has not presented one objective analysis to support his claim that his policies would create 1 million more jobs, much less 10 million more.
John Kerry has adopted the Walter Mondale approach to economics — increase taxes. Even advocates of Keynesian economics would not recommend raising taxes in the early stages of an economic recovery. Unlike Mondale, however, Kerry will wait until after the election to reveal all of the tax increases that will be required to pay for his government spending promises. Three hundred and sixty eight economists hope American voters will heed their warnings before it is too late.
— J. Edward Carter is an economist in Washington, D.C. Cesar V. Conda, formerly assistant for domestic policy to Vice President Dick Cheney, is a senior fellow at FreedomWorks in Washington, D.C.
That was the conclusion released in a statement Wednesday by 368 economists, including six Nobel laureates: Gary Becker, James Buchanan, Milton Friedman, Robert Lucas, Robert Mundell, and — the winner of this year’s Nobel Prize in Economics — Edward C. Prescott. The economists warned that Sen. Kerry’s policies “would, over time, inhibit capital formation, depress productivity growth, and make the United States less competitive internationally. The end result would be lower U.S. employment and real wage growth.”
Consider Kerry’s spending and tax proposals. Kerry claims he wants to balance the federal budget, but as the Washington Post pointed out last August, “Sen. John F. Kerry’s pledge to reduce record federal budget deficits is colliding with an obstacle that may be growing higher by the week: his own campaign commitments.” In fact, Kerry’s spending proposals would add an estimated $226 billion annually to federal spending. To put this in perspective, $226 billion is roughly equal to the gross domestic products of Greece or Sweden.
Kerry’s oft-repeated budget solution is to raise taxes on “families making over $200,000 on income earned above $200,000 to their levels under President Clinton.” This proposal would generate hundreds-of-billions of dollars over the next decade for the Treasury’s coffers. Kerry’s other proposed tax increases would generate billions more. Yet, these tax increases would offset only a fraction of Kerry’s new spending.
For instance, Senator Kerry’s government-run health insurance spending plan would by itself require a tax increase of more than $1 trillion. Two independent studies, one by the Lewin Group and another by the American Enterprise Institute, concluded that Kerry’s health insurance proposal would cost more than $1 trillion over the next 10 years. And that’s just one of Kerry’s spending proposals. To close the funding gap between all of his spending and tax promises, Kerry would have to raise taxes by an average of $1,431 for everyone who files an income-tax return.
The stark disconnect between Kerry’s spending and tax proposals is what prompted 368 leading economists to conclude, “Kerry’s stated desire to balance the budget and to boost federal spending substantially would almost certainly require far higher and broader tax increases than he has proposed.” And given Kerry’s voting record in the Senate — he has cast 98 votes for tax increases totaling more than $2.3 trillion throughout his legislative career — that is no idle threat.
It is no secret that John Kerry wants America’s foreign policy to be more like that of Germany and France. But perhaps even more disturbing, he has demonstrated that he wants to emulate their failed tax-and-spend economic policies, too. Over time, the consequences could be devastating. Consider the impact those policies have had on Europe. Germany and France once enjoyed standards of living comparable to those of the United States. Today, U.S. per capita GDP is 38 percent higher than that of Germany and 43 percent higher than that of France. Indeed, as economist Bruce Bartlett recently pointed out, “On average, Europeans only live about as well as those in the poorest American state, Mississippi.”
The 368 economists only briefly touched upon Kerry’s trade policies. As it happens, there is not much upon which to comment. Kerry has expressed a general reluctance to reduce trade barriers, and he has promised, if elected, to “review existing trade agreements.” His applause line is that he vows not to “sign any new trade agreements until the review is complete and its recommendations [are] put in place.” According to the 368 economists, “That's a prescription for political gridlock. Given the widespread benefits of unfettered trade, Kerry’s trade policies would harm U.S. producers and consumers alike.”
Finally, we have all heard John Kerry denigrate the present rate of job creation. Yet, according to latest Bureau of Labor Statistics employment report, 1.9 million jobs have been created since August 2003. And at 5.4 percent, the unemployment rate is below the average unemployment rates of the 1970s, 1980s, and 1990s.
We have also heard Kerry’s solemn vow to create 10 million new jobs during his first term as president. But you probably have not heard that the U.S. economy is likely to create about that many jobs over the next four years under current policy.
During the first nine months of 2004 — while Kerry was criticizing the pace of employment growth — payroll employment grew an average of more than 170,000 jobs a month. At that rate, the next administration would preside over the creation of roughly 8.2 million net new jobs. And yet, as Martin Sullivan pointed out in Tax Notes, Kerry has not presented one objective analysis to support his claim that his policies would create 1 million more jobs, much less 10 million more.
John Kerry has adopted the Walter Mondale approach to economics — increase taxes. Even advocates of Keynesian economics would not recommend raising taxes in the early stages of an economic recovery. Unlike Mondale, however, Kerry will wait until after the election to reveal all of the tax increases that will be required to pay for his government spending promises. Three hundred and sixty eight economists hope American voters will heed their warnings before it is too late.
— J. Edward Carter is an economist in Washington, D.C. Cesar V. Conda, formerly assistant for domestic policy to Vice President Dick Cheney, is a senior fellow at FreedomWorks in Washington, D.C.
Monday, October 11, 2004
Framing the Economic Debate
by Tim Kane, Ph.D., Rea S. Hederman, and Kirk Johnson, Ph.D.
WebMemo #582
October 7, 2004 | printer-friendly format |
The U.S. economy has displayed a remarkable resilience following the bursting of the Internet bubble and the 9/11 terrorist attacks that struck at the heart of American business. The economy’s strength was such that the 2001 recession is among the weakest on record. Today, business investment continues on an unprecedented expansion and more Americans are working than ever before. Still, myths are rampant. This paper presents a basic statistical overview of the American economy and prosperity that Americans today enjoy.
I. Jobs, Employment, and Income
There are three main indicators that inform the issue of employment in America. First is the overall growth of jobs. Naturally, a net increase in employment is seen as progress, but this statistic really only matters if the population is growing. Economists have long believed that the key measure of employment is the percentage of people who are employed out of the entire population of potential workers. Many citizens simply don’t want to work in the formal labor force, either because they are studying for advanced degrees, retired, or caring for other matters in the home. Thus, the unemployment rate is the best way to assess economic health. And another indicator to watch is labor compensation, which represents the quality of jobs for many observers.
Jobs: Payroll or Household?
The government provides many measures of job creation, but the two best known come from the Bureau of Labor Statistics payroll survey and the Census Bureau household survey. As widely reported, the two surveys are telling opposite stories.
Since January 2001, when President George W. Bush was sworn in, payroll jobs have declined by millions and recovered by millions, but still remain 900,000 jobs below their peak. (Source: Bureau of Labor Statistics)
On the other hand, the household survey reports a record high level of working Americans, with 1.8 million more jobs since January 2001. (Source: Bureau of Labor Statistics)
Ironically, both surveys may be correct because they count jobs differently. The household survey counts all jobs, including a growing but hard to define class of new economy workers such as part-time consultants, eBay entrepreneurs, and even real estate agents—people who are not on payrolls. The payroll survey’s name says it all. What it doesn’t say is that payrolls provide a vast sample size, which some see as a sign of its unmatched accuracy. But the real question is whether its sample quality is clean, and in August, the BLS acknowledged that the survey has sample problems: it counts workers twice when they change jobs, which may account for between 400,000 and one million of the job difference between the two surveys. (See BLS, “Effects of Job Changing on Payroll Survey Employment Trends.”)
Unemployment and the Recession
Unemployment, a lagging indicator, remained mild throughout and after the 2001 recession, peaking at 6.3 percent. In contrast, unemployment peaked at 7.8 percent following the 1990 recession. (Unemployment exceeded 6.3 percent for 40 months following the 1990 recession). And unemployment peaked at 10.8 percent following the 1980 recession. (Source: Bureau of Labor Statistics)
An unemployment rate of 6.3 percent, the peak following the 2001 recession, is lower than the average unemployment rate for the 1980s and less than one point higher than the average unemployment rate for the 1990s. (Source: Bureau of Labor Statistics)
(click image to expand)
Dissecting the Unemployment Rate
The unemployment rate is the preeminent measure of the intensity of labor demand. When the rate dips below what economists consider the “full-employment” rate of around 5 or 5.5 percent, then the labor market is likely overheating, driving up inflation.
But some critics contend the current low rate of 5.4 percent is a mirage because it neglects to include all the discouraged workers. The problem with that argument is the fact that BLS counts discouraged workers and even publishes an alternative “underemployment rate” called U-4, which is barely higher than the official rate. There are no more discouraged workers today then there were in the mid-1990s.
(click image to expand)
Labor Force Participation
The fallback critique is that labor force participation has declined from a peak of 67.2 percent in January 2001. That’s true, but most of the decline was due to 9/11, not the recession. It was 66.8 percent in October 2001, then 66.0 percent in August 2004. Analysts need to consider the reality that labor supply has changed, not just labor demand. Two other points illuminate:
First, the participation rate of women over 20 is the same as it was in 1997 and higher than every year prior. (Source: Bureau of Labor Statistics)
Second, the decline in total participation rates since 2001 is largely driven by the unprecedented dropoff in teenagers aged 16-19 who are willing to work, from 52 percent in 2000 to 43 percent in 2004. (Source: Bureau of Labor Statistics)
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Unemployment Claims
Initial claims announced this week were at 335,000, and the 4-week moving average is 348,500. (Source: Bureau of Labor Statistics)
The 25-year average of initial claims is 380,520. (Source: Bureau of Labor Statistics)
The Wall Street rule of thumb is that any level of claims below 400,000 signifies labor market strength. (Source: The Wall Street Journal’s Career Journal)
Real Earnings
Worker pay is a sign of job quality. The Labor Department’s measure of real hourly earnings is one of many pay statistics and includes all monetary compensation but not benefits. It only counts earnings for non-executive workers, unlike other measures.
During the 1980 and 1990 recessions, real hourly earnings declined. (Source: Bureau of Labor Statistics)
But even during and after the 2001 recession, real earnings have risen—by 2 percent since the recession began in March 2001. (Source: Bureau of Labor Statistics)
Real earnings are higher now than at the height of the dot-com boom in 2000. (Source: Bureau of Labor Statistics)
Manufacturing
Jobs in manufacturing are on the decline worldwide, due to new technology, increasing productivity, and strong competition. From 1995 to 2002, worldwide manufacturing employment declined 11 percent—which matches the decline of manufacturing employment in the United States over that period. (Source: Alliance Capital Management)
Even in China, employment in the manufacturing sector has fallen—by 15 percent from 1995 to 2002. (Source: Alliance Capital Management)
Regardless, manufacturing in the United States has rebounded strongly of late. Production is rising quickly, and employment reversed its decline in February of this year and is now expanding.
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II. Economic Growth
The economy, as measured by real Gross Domestic Product, grew at a 3.3 percent rate in the second quarter of 2004, following a high 4.5 percent growth rate in the first quarter. (Source: Bureau of Economic Analysis)
Growth in 2003 was similarly charged, coming in at a 4.4 percent annual rate.
The average growth rate during the 1990s was 3.26 percent, just under the last quarter’s rate of growth and well below the growth rate for 2004 so far.
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Tax Cuts and Business Investment
The 2003 tax cuts reduced taxes on business investment. When businesses invest in facilities, equipment, computers, software, and other inputs, they make clear their belief that future growth will be strong and they create the preconditions for economic expansion and job creation.
Business investment contracted at a 1.14 percent annualized rate over the 14 quarters prior to the 2003 tax cuts. (Source: Bureau of Economic Analysis)
Business investment grew at a 13.03 percent rate over the 3 quarters following the 2003 tax cuts. (Source: Bureau of Economic Analysis)
(click image to expand)
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III. Outsourcing and Insourcing
Forrester Research estimates 3.5 million outsourced jobs between 2000 and 2015. (Forrester Research)
Over the past decade, 7.71 million jobs, on average, are lost every quarter as part of the normal flux of the economy. Forrester’s estimate would account for less than one percent of the jobs lost each quarter, on average. (Source: Department of Labor, Business Employment Dynamics Data Series; Forrester Research)
Today, more than 5.4 million jobs in America are the result of insourcing—that is, they have been outsourced from abroad into the United States. (Source: Organization for International Investment)
Annually, these insourced jobs account for $307 billion in wages and salaries. (Source: Organization for International Investment)
Insourced jobs pay, on average, 19.1 percent more than the average job in the United States. (Source: Organization for International Investment)
In the first quarter of 2004, just 4,633 workers were laid off as a result of offshore outsourcing due to mass layoffs—about 2 percent of total mass job layoffs. (Bureau of Labor Statistics, “Extended Mass Layoffs Associated With Domestic and Overseas Relocations”)
In terms of the industries affected and positions potentially at risk, the use of outsourcing has changed little over the past five years. In other words, this is no rapidly accelerating trend. (Source: Government Accountability Office, “International Trade: Current Government Data Provide Limited Insight into Offshoring of Services”)
The United States exports more business, technical, and professional services than it imports (and offshore outsourcing of service work is synonymous with importing those services). In 2003, the trade surplus for these services was $27.0 billion. (Source: Bureau of Economic Analysis, “Survey of Current Business”)
IV. Health Care
The Uninsured
According to the U.S. Census Bureau, 44.9 million Americans went without health insurance for some part of 2003.
The typical family that loses coverage is uninsured for 5.6 months on average. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
Only 3.3 percent of all Americans went without some kind of health insurance for four or more years. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
In 1996, some 8.8 percent were without health insurance for the entire year, a figure that dropped to 8.0 percent by 1999. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
78.2 percent of all Americans had health insurance for the entire year in 1996, which rose to 80.4 percent by 1999. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
Medicaid enrollment has grown in recent years but is undercounted by the Census survey of the uninsured. Census counts 18 million fewer enrollees than the Centers for Medicare and Medicaid Services. (Source: U.S. Census Bureau and HHS program data)
Health Savings Accounts
Health Savings Accounts (HSAs) were enacted as part of the Medicare Modernization Act of 2003. They came into effect on January 1, 2004.
The majority of HSA enrollees pay between $51 and $100 a month for coverage, far less than for other types of individual insurance.
Early experience shows major cost-savings for small businesses. Some small businesses have been able to cut their health coverage expenditures by 20 percent using HSAs, while holding employee out-of-pocket expenses steady and actually improving the level of care.
V. Poverty
The 2001 Recession
The poverty rate for 2003 was recently published and stood at 12.5 percent, which is higher than in recent years, but still better than the poverty rate in 1998 of 12.7 percent and the poverty rates of the fifteen years prior. (Source: Census Bureau)
Poverty always rises with recessions, but the increase in poverty stemming from the most recent recession was about half the increase from each of the previous two recessions. (Source: Census Bureau)
(click image to expand)
In previous recessions, child poverty increased significantly, but the most recent recession affected child poverty little. The 1980 recession caused a 5.5 percentage point jump in child poverty. The 1990 recession caused a 2.7 percentage point jump in poverty. The 2001 recession, in contrast, caused only a 1.6 percentage point rise in child poverty. (Source: Census Bureau)
(click image to expand)
Poverty in America
More than half of all poverty “spells” (time spent in poverty) last less than four months, and about 80 percent last less than a year. (Source: U.S. Census Bureau, “Dynamics of Economic Wellbeing: Poverty 1996-1999”)
Very few people—only about 2 percent of the total population—are chronically poor in America, as defined by living in poverty for four years or more. (Source: U.S. Census Bureau, “Dynamics of Economic Wellbeing: Poverty 1996-1999”)
About 13 percent of poor families and 2.6 percent of poor children experience hunger at some point during the year. In most cases, their hunger is short-term. Eighty-nine percent of the poor report their families have "enough" food to eat, while only 2 percent say they "often" do not have enough to eat. (Source: U.S. Department of Agriculture, "Household Food Security in the United States")
About 38 percent of all households in the lowest income quintile (that is, the bottom 20 percent of earners) rose to a higher quintile within three years. An almost equal percentage (34 percent) of all households in the top quintile fell within three years. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Movements in the U.S. Income Distribution 1996-1999”)
Income Inequality
By the uncorrected Census numbers, the top 20 percent of earners, or top quintile, appear to have $14.20 of income for every $1 of income that the bottom 20 percent earn. (Source: Census Bureau, Current Population Survey for 2002)
But the Census figures do not account for benefits—employer- and government-provided—and taxes, differing household sizes between the quintiles, and differing work habits between the quintiles.
Accounting for benefits and taxes, the income ratio between the top and bottom quintiles drops to $8.60 for every $1. (Source: Census Bureau, Current Population Survey for 2002; Center for Data Analysis)
Accounting additionally for household sizes, the income ratio between the top and bottom quintiles drops to $4.21 for every $1. (Source: Census Bureau, Current Population Survey for 2002; Center for Data Analysis)
Finally, accounting additionally for hours worked (that is, making the assumption that all non-elderly adults work equal amounts), the income ratio between the top and bottom quintiles drops to $2.91 for every $1. (Source: Census Bureau, Current Population Survey for 2002; Center for Data Analysis)
(click image to expand)
Poverty and Taxation
Households in the top income quintile provide one-third of all labor in the economy. (Source: Census Bureau, Current Population Survey for 2002)
Households in the top income quintile pay 82.5 percent of total federal income taxes and two-thirds of federal taxes overall. (Source: Congressional Budget Office, “Effective Tax Rates Under Current Law”)
Households in the bottom income quintile pay 1.1 percent of total federal taxes. (Source: Congressional Budget Office, “Effective Tax Rates Under Current Law”)
Nearly forty million tax filers, about one-third of the total, pay no income taxes. Nearly all of these zero-tax filers are low-income individuals and families. Many of them actually receive money for filing taxes, through the child tax credit or the earned income tax credit. (Source: The Tax Foundation)
VI. The Tax Cuts
The expanded child tax credit, which was recently extended by Congress and the President, benefits the parents of over 47 million children. (Source: Center for Data Analysis)
In 2001 and 2003, Congress and the President cut taxes on married couples to reduce the “marriage penalty”—the premium that married couples paid in taxes above what the couple would have paid had they filed separately.
Congress and the President extended the marriage penalty fix in 2004, benefiting 33 million joint-filing couples—mostly couples in which both spouses work and the second earner contributes at least 30 percent of total income. (Source: Center for Data Analysis)
In 2001, Congress and the President created a new 10-percent tax bracket for low-income workers, reducing their marginal tax rate from 15 percent. In 2003, Congress and the President expanded the 10-percent bracket, and in 2004 Congress and the President extended the 2003 expansion, which was due to expire. That extension will benefit 80 million taxpayers. (Source: Center for Data Analysis)
The Bush tax cuts, even if made permanent, return the tax burden to its historical level as a proportion of the economy. (Source: Congressional Budget Office)
(click image to expand)
Allowing the Bush tax cuts expire would raise the tax burden to historically unprecedented levels. (Source: Congressional Budget Office)
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VII. Conclusion
The economy has added more than 1.5 million payroll jobs over the past year and nearly 2 million jobs on the household survey. Most indicators point towards continued growth. Output is booming, the manufacturing outlook is positive, business confidence is high, and productivity continues to set records. Even such favorites among economic pessimists like data on long-term unemployment, manufacturing employment, and worker discouragement are showing marked improvement. Unfortunately for the pessimists, these are the facts that frame the debate on the economy today.
Tim Kane, Ph.D., is Research Fellow, Rea S. Hederman is Senior Policy Analyst, and Kirk Johnson, Ph.D., is Senior Policy Analyst, in the Center for Data Analysis at The Heritage Foundation.
by Tim Kane, Ph.D., Rea S. Hederman, and Kirk Johnson, Ph.D.
WebMemo #582
October 7, 2004 | printer-friendly format |
The U.S. economy has displayed a remarkable resilience following the bursting of the Internet bubble and the 9/11 terrorist attacks that struck at the heart of American business. The economy’s strength was such that the 2001 recession is among the weakest on record. Today, business investment continues on an unprecedented expansion and more Americans are working than ever before. Still, myths are rampant. This paper presents a basic statistical overview of the American economy and prosperity that Americans today enjoy.
I. Jobs, Employment, and Income
There are three main indicators that inform the issue of employment in America. First is the overall growth of jobs. Naturally, a net increase in employment is seen as progress, but this statistic really only matters if the population is growing. Economists have long believed that the key measure of employment is the percentage of people who are employed out of the entire population of potential workers. Many citizens simply don’t want to work in the formal labor force, either because they are studying for advanced degrees, retired, or caring for other matters in the home. Thus, the unemployment rate is the best way to assess economic health. And another indicator to watch is labor compensation, which represents the quality of jobs for many observers.
Jobs: Payroll or Household?
The government provides many measures of job creation, but the two best known come from the Bureau of Labor Statistics payroll survey and the Census Bureau household survey. As widely reported, the two surveys are telling opposite stories.
Since January 2001, when President George W. Bush was sworn in, payroll jobs have declined by millions and recovered by millions, but still remain 900,000 jobs below their peak. (Source: Bureau of Labor Statistics)
On the other hand, the household survey reports a record high level of working Americans, with 1.8 million more jobs since January 2001. (Source: Bureau of Labor Statistics)
Ironically, both surveys may be correct because they count jobs differently. The household survey counts all jobs, including a growing but hard to define class of new economy workers such as part-time consultants, eBay entrepreneurs, and even real estate agents—people who are not on payrolls. The payroll survey’s name says it all. What it doesn’t say is that payrolls provide a vast sample size, which some see as a sign of its unmatched accuracy. But the real question is whether its sample quality is clean, and in August, the BLS acknowledged that the survey has sample problems: it counts workers twice when they change jobs, which may account for between 400,000 and one million of the job difference between the two surveys. (See BLS, “Effects of Job Changing on Payroll Survey Employment Trends.”)
Unemployment and the Recession
Unemployment, a lagging indicator, remained mild throughout and after the 2001 recession, peaking at 6.3 percent. In contrast, unemployment peaked at 7.8 percent following the 1990 recession. (Unemployment exceeded 6.3 percent for 40 months following the 1990 recession). And unemployment peaked at 10.8 percent following the 1980 recession. (Source: Bureau of Labor Statistics)
An unemployment rate of 6.3 percent, the peak following the 2001 recession, is lower than the average unemployment rate for the 1980s and less than one point higher than the average unemployment rate for the 1990s. (Source: Bureau of Labor Statistics)
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Dissecting the Unemployment Rate
The unemployment rate is the preeminent measure of the intensity of labor demand. When the rate dips below what economists consider the “full-employment” rate of around 5 or 5.5 percent, then the labor market is likely overheating, driving up inflation.
But some critics contend the current low rate of 5.4 percent is a mirage because it neglects to include all the discouraged workers. The problem with that argument is the fact that BLS counts discouraged workers and even publishes an alternative “underemployment rate” called U-4, which is barely higher than the official rate. There are no more discouraged workers today then there were in the mid-1990s.
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Labor Force Participation
The fallback critique is that labor force participation has declined from a peak of 67.2 percent in January 2001. That’s true, but most of the decline was due to 9/11, not the recession. It was 66.8 percent in October 2001, then 66.0 percent in August 2004. Analysts need to consider the reality that labor supply has changed, not just labor demand. Two other points illuminate:
First, the participation rate of women over 20 is the same as it was in 1997 and higher than every year prior. (Source: Bureau of Labor Statistics)
Second, the decline in total participation rates since 2001 is largely driven by the unprecedented dropoff in teenagers aged 16-19 who are willing to work, from 52 percent in 2000 to 43 percent in 2004. (Source: Bureau of Labor Statistics)
(click image to expand)
Unemployment Claims
Initial claims announced this week were at 335,000, and the 4-week moving average is 348,500. (Source: Bureau of Labor Statistics)
The 25-year average of initial claims is 380,520. (Source: Bureau of Labor Statistics)
The Wall Street rule of thumb is that any level of claims below 400,000 signifies labor market strength. (Source: The Wall Street Journal’s Career Journal)
Real Earnings
Worker pay is a sign of job quality. The Labor Department’s measure of real hourly earnings is one of many pay statistics and includes all monetary compensation but not benefits. It only counts earnings for non-executive workers, unlike other measures.
During the 1980 and 1990 recessions, real hourly earnings declined. (Source: Bureau of Labor Statistics)
But even during and after the 2001 recession, real earnings have risen—by 2 percent since the recession began in March 2001. (Source: Bureau of Labor Statistics)
Real earnings are higher now than at the height of the dot-com boom in 2000. (Source: Bureau of Labor Statistics)
Manufacturing
Jobs in manufacturing are on the decline worldwide, due to new technology, increasing productivity, and strong competition. From 1995 to 2002, worldwide manufacturing employment declined 11 percent—which matches the decline of manufacturing employment in the United States over that period. (Source: Alliance Capital Management)
Even in China, employment in the manufacturing sector has fallen—by 15 percent from 1995 to 2002. (Source: Alliance Capital Management)
Regardless, manufacturing in the United States has rebounded strongly of late. Production is rising quickly, and employment reversed its decline in February of this year and is now expanding.
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II. Economic Growth
The economy, as measured by real Gross Domestic Product, grew at a 3.3 percent rate in the second quarter of 2004, following a high 4.5 percent growth rate in the first quarter. (Source: Bureau of Economic Analysis)
Growth in 2003 was similarly charged, coming in at a 4.4 percent annual rate.
The average growth rate during the 1990s was 3.26 percent, just under the last quarter’s rate of growth and well below the growth rate for 2004 so far.
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Tax Cuts and Business Investment
The 2003 tax cuts reduced taxes on business investment. When businesses invest in facilities, equipment, computers, software, and other inputs, they make clear their belief that future growth will be strong and they create the preconditions for economic expansion and job creation.
Business investment contracted at a 1.14 percent annualized rate over the 14 quarters prior to the 2003 tax cuts. (Source: Bureau of Economic Analysis)
Business investment grew at a 13.03 percent rate over the 3 quarters following the 2003 tax cuts. (Source: Bureau of Economic Analysis)
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(click image to expand)
III. Outsourcing and Insourcing
Forrester Research estimates 3.5 million outsourced jobs between 2000 and 2015. (Forrester Research)
Over the past decade, 7.71 million jobs, on average, are lost every quarter as part of the normal flux of the economy. Forrester’s estimate would account for less than one percent of the jobs lost each quarter, on average. (Source: Department of Labor, Business Employment Dynamics Data Series; Forrester Research)
Today, more than 5.4 million jobs in America are the result of insourcing—that is, they have been outsourced from abroad into the United States. (Source: Organization for International Investment)
Annually, these insourced jobs account for $307 billion in wages and salaries. (Source: Organization for International Investment)
Insourced jobs pay, on average, 19.1 percent more than the average job in the United States. (Source: Organization for International Investment)
In the first quarter of 2004, just 4,633 workers were laid off as a result of offshore outsourcing due to mass layoffs—about 2 percent of total mass job layoffs. (Bureau of Labor Statistics, “Extended Mass Layoffs Associated With Domestic and Overseas Relocations”)
In terms of the industries affected and positions potentially at risk, the use of outsourcing has changed little over the past five years. In other words, this is no rapidly accelerating trend. (Source: Government Accountability Office, “International Trade: Current Government Data Provide Limited Insight into Offshoring of Services”)
The United States exports more business, technical, and professional services than it imports (and offshore outsourcing of service work is synonymous with importing those services). In 2003, the trade surplus for these services was $27.0 billion. (Source: Bureau of Economic Analysis, “Survey of Current Business”)
IV. Health Care
The Uninsured
According to the U.S. Census Bureau, 44.9 million Americans went without health insurance for some part of 2003.
The typical family that loses coverage is uninsured for 5.6 months on average. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
Only 3.3 percent of all Americans went without some kind of health insurance for four or more years. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
In 1996, some 8.8 percent were without health insurance for the entire year, a figure that dropped to 8.0 percent by 1999. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
78.2 percent of all Americans had health insurance for the entire year in 1996, which rose to 80.4 percent by 1999. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Health Insurance 1996-1999”)
Medicaid enrollment has grown in recent years but is undercounted by the Census survey of the uninsured. Census counts 18 million fewer enrollees than the Centers for Medicare and Medicaid Services. (Source: U.S. Census Bureau and HHS program data)
Health Savings Accounts
Health Savings Accounts (HSAs) were enacted as part of the Medicare Modernization Act of 2003. They came into effect on January 1, 2004.
The majority of HSA enrollees pay between $51 and $100 a month for coverage, far less than for other types of individual insurance.
Early experience shows major cost-savings for small businesses. Some small businesses have been able to cut their health coverage expenditures by 20 percent using HSAs, while holding employee out-of-pocket expenses steady and actually improving the level of care.
V. Poverty
The 2001 Recession
The poverty rate for 2003 was recently published and stood at 12.5 percent, which is higher than in recent years, but still better than the poverty rate in 1998 of 12.7 percent and the poverty rates of the fifteen years prior. (Source: Census Bureau)
Poverty always rises with recessions, but the increase in poverty stemming from the most recent recession was about half the increase from each of the previous two recessions. (Source: Census Bureau)
(click image to expand)
In previous recessions, child poverty increased significantly, but the most recent recession affected child poverty little. The 1980 recession caused a 5.5 percentage point jump in child poverty. The 1990 recession caused a 2.7 percentage point jump in poverty. The 2001 recession, in contrast, caused only a 1.6 percentage point rise in child poverty. (Source: Census Bureau)
(click image to expand)
Poverty in America
More than half of all poverty “spells” (time spent in poverty) last less than four months, and about 80 percent last less than a year. (Source: U.S. Census Bureau, “Dynamics of Economic Wellbeing: Poverty 1996-1999”)
Very few people—only about 2 percent of the total population—are chronically poor in America, as defined by living in poverty for four years or more. (Source: U.S. Census Bureau, “Dynamics of Economic Wellbeing: Poverty 1996-1999”)
About 13 percent of poor families and 2.6 percent of poor children experience hunger at some point during the year. In most cases, their hunger is short-term. Eighty-nine percent of the poor report their families have "enough" food to eat, while only 2 percent say they "often" do not have enough to eat. (Source: U.S. Department of Agriculture, "Household Food Security in the United States")
About 38 percent of all households in the lowest income quintile (that is, the bottom 20 percent of earners) rose to a higher quintile within three years. An almost equal percentage (34 percent) of all households in the top quintile fell within three years. (Source: U.S. Census Bureau, “Dynamics of Economic Well-being: Movements in the U.S. Income Distribution 1996-1999”)
Income Inequality
By the uncorrected Census numbers, the top 20 percent of earners, or top quintile, appear to have $14.20 of income for every $1 of income that the bottom 20 percent earn. (Source: Census Bureau, Current Population Survey for 2002)
But the Census figures do not account for benefits—employer- and government-provided—and taxes, differing household sizes between the quintiles, and differing work habits between the quintiles.
Accounting for benefits and taxes, the income ratio between the top and bottom quintiles drops to $8.60 for every $1. (Source: Census Bureau, Current Population Survey for 2002; Center for Data Analysis)
Accounting additionally for household sizes, the income ratio between the top and bottom quintiles drops to $4.21 for every $1. (Source: Census Bureau, Current Population Survey for 2002; Center for Data Analysis)
Finally, accounting additionally for hours worked (that is, making the assumption that all non-elderly adults work equal amounts), the income ratio between the top and bottom quintiles drops to $2.91 for every $1. (Source: Census Bureau, Current Population Survey for 2002; Center for Data Analysis)
(click image to expand)
Poverty and Taxation
Households in the top income quintile provide one-third of all labor in the economy. (Source: Census Bureau, Current Population Survey for 2002)
Households in the top income quintile pay 82.5 percent of total federal income taxes and two-thirds of federal taxes overall. (Source: Congressional Budget Office, “Effective Tax Rates Under Current Law”)
Households in the bottom income quintile pay 1.1 percent of total federal taxes. (Source: Congressional Budget Office, “Effective Tax Rates Under Current Law”)
Nearly forty million tax filers, about one-third of the total, pay no income taxes. Nearly all of these zero-tax filers are low-income individuals and families. Many of them actually receive money for filing taxes, through the child tax credit or the earned income tax credit. (Source: The Tax Foundation)
VI. The Tax Cuts
The expanded child tax credit, which was recently extended by Congress and the President, benefits the parents of over 47 million children. (Source: Center for Data Analysis)
In 2001 and 2003, Congress and the President cut taxes on married couples to reduce the “marriage penalty”—the premium that married couples paid in taxes above what the couple would have paid had they filed separately.
Congress and the President extended the marriage penalty fix in 2004, benefiting 33 million joint-filing couples—mostly couples in which both spouses work and the second earner contributes at least 30 percent of total income. (Source: Center for Data Analysis)
In 2001, Congress and the President created a new 10-percent tax bracket for low-income workers, reducing their marginal tax rate from 15 percent. In 2003, Congress and the President expanded the 10-percent bracket, and in 2004 Congress and the President extended the 2003 expansion, which was due to expire. That extension will benefit 80 million taxpayers. (Source: Center for Data Analysis)
The Bush tax cuts, even if made permanent, return the tax burden to its historical level as a proportion of the economy. (Source: Congressional Budget Office)
(click image to expand)
Allowing the Bush tax cuts expire would raise the tax burden to historically unprecedented levels. (Source: Congressional Budget Office)
(click image to expand)
VII. Conclusion
The economy has added more than 1.5 million payroll jobs over the past year and nearly 2 million jobs on the household survey. Most indicators point towards continued growth. Output is booming, the manufacturing outlook is positive, business confidence is high, and productivity continues to set records. Even such favorites among economic pessimists like data on long-term unemployment, manufacturing employment, and worker discouragement are showing marked improvement. Unfortunately for the pessimists, these are the facts that frame the debate on the economy today.
Tim Kane, Ph.D., is Research Fellow, Rea S. Hederman is Senior Policy Analyst, and Kirk Johnson, Ph.D., is Senior Policy Analyst, in the Center for Data Analysis at The Heritage Foundation.
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