Have you ever seen so much hatred for, and vitriolic criticism of, someone who had only a brief stint on the national political stage? More than a year after the presidential election in which Sarah Palin, as the GOP nominee for Vice-President, campaigned for about three months, she is still being pilloried by the left-wing loons as though she had been elected and were actively engaged in dismantling the liberal establishment. Not a day goes by in which we don't hear or read vicious attacks on a woman who represents the wholesome conservative values of Middle America -- values that have been insidiously and incrementally eroded during the last few decades.
There's an interesting contrast between Palin and Barack Obama. We keep hearing that she's not qualified to be president, but Obama is. Why? Some say it's because she didn't have enough experience in government. Yet as Governor of Alaska, Palin earned executive experience, while the current Oval Office resident had only a few years of legislative work. Others point to the interviews with Katie Couric and Charles Gibson during the campaign last year.
Let's understand something: Couric and Gibson are liberal journalists who live for those gotcha moments when they can embarrass a conservative and get a round of high-fives at the next penthouse cocktail party on Central Park West. In contrast, Obama's interviewers seemed like they were more interested in dating him than they were in getting answers to questions. Obama's personal lapdog, MS-NBC's Chris Mathews, gets a thrill up his leg from the chosen one. It's obvious that Mathews has some sort of unresolved intimacy issues to deal with.
In the liberal mind, Obama can do no wrong, mainly because he's black. If he fouls up with a misstatement or a faux pas, they'll cover for him as though they were protecting a child with a debilitating disease. It reminds me of what Bush 2 used to refer to as "the soft bigotry of low expectations." When one of these sycophants asks Obama a question, it's not only a softball, but it comes with heavy breathing and dangling tongues.
Compare that to the lion's den that Palin walked into every time she sat down with one of Obama's obsequious panderers. Given the ideology of the interviewers, I already knew how things would turn out. What really impressed me was watching this woman muster the courage to face her liberal antagonists on national television. How much courage does it take for Obama to engage in one of those cozy love-fests with his fan club?
What this country needs is a strong conservative leader with the courage of her convictions. Sensing those qualities in Sarah Palin, the liberal left is becoming frantic because they can't seem to halt her popularity. The reason they're panicking is because they're afraid of her connection with regular folks who work for a living, pay their taxes, attend a religious worship service regularly, and believe that our country has lost the moral fiber that once united us. The book Profiles in Courage by John F. Kennedy covered several historical figures who stood up against the corruption surrounding them and defeated it. Sarah Palin did exactly that in her home state of Alaska. In a saner time in our history, she'd be a shoo-in for the White House.
But we're living in an era of in-your-face corruption, a time when elected officials rob us blind and dare us to do something about it. The powerful Chairman of the Ways and Means Committee, New York Congressman Charles Rangel, is facing a growing investigation of ethics violations and tax scandals. When the man empowered with the responsibility to write our tax laws refuses to pay his own taxes, something terrible has happened to our country. With a laundry list of misbehavior attributed to him, Rangel boldly clings to his seat, his chairmanship, and his reelection bid.
This has become a pattern across the country. Whether the politicians get caught with their fingers wrapped around bribe money, or with their arms wrapped around someone else's spouse, they arrogantly tell the public that it will not deter them from running for reelection. Once upon a time in America, a politician might be unscrupulous, but if he got caught, he'd be history. Now, we have a president of the United States who appointed a tax cheat (Treasury Secretary Tim Geithner) to his cabinet and attempted to appoint another tax cheat (Tom Daschle) to lead Health and Human Services. Kathleen Sebelius, the Kansas Governor, ended up with her job only after paying about $8,000 in back taxes.
I could illustrate hundreds of other examples of rampant corruption by people in elective office. Pointing to government decay is the job of the free press. But are they hounding any of the power-hungry scoundrels that masquerade as symbols of decency and honor? No, they're engaged in a continuous merciless attack on a woman who has led the way in the fight against the very corruption being overlooked by those who have become blinded by ideology.
Sarah Palin is a threat because she symbolizes decency in a country taken hostage by moral degenerates. If she isn't stopped, this country might end up reclaiming some of the values that made us the envy of the world.
Bob Weir is a former detective sergeant in the New York City Police Department. He is the executive editor of The News Connection in Highland Village, Texas. E-mail Bob.
73 Comments on "Why the Left Fears Sarah"
Wednesday, November 18, 2009
Wednesday, November 04, 2009
Why Markets Fail
Ben Shapiro
Wednesday, November 04, 2009
President Obama says he is a fan of the free market. Back in September, Obama spoke to Wall Street. He stated, "I have always been a strong believer in the power of the free market." He then explained that he wanted common-sense regulation of the market: "Common-sense rules of the road don't hinder the market, they make the market stronger. Indeed, they are essential to ensuring that our markets function fairly and freely."
To paraphrase Spanish dueler Inigo Montoya from "The Princess Bride": President Obama, you keep using the phrase "free markets." I do not think it means what you think it means.
Here is how the free market works: open competition among sellers, informed bidding among buyers. Sellers are responsible for competing; buyers are responsible for informing themselves. When the government pledges to increase competition or keep buyers informed, the market is no longer free. And when the government makes those pledges and then fails to enforce them, the free market is utterly perverted.
AUnfortunately, President Obama's favorite "common-sense" regulations attack both sides of the free market: they restrict competition among sellers while providing false guarantees to buyers. They require that sellers charge certain prices or meet certain conditions, and they incentivize buyers not to do their research -- after all, the government will ensure that no one puts bad products into the market place, right?
Wrong. Goldman Sachs is a perfect example of how the quasi-free market championed by Obama leads to chaos. On Monday, McClatchy Newspapers reported that Goldman Sachs, the nation's leading investment bank, profited handsomely from the downturn in the housing market by falsely selling mortgage-backed securities as triple-A rated investments. The securities were actually closer to junk. In 2006 and 2007, Goldman sold more than $40 billion in mortgage-backed securities, meanwhile betting against the housing market in shady ways.
The question isn't whether Goldman committed legal fraud here, although the indicators say that Goldman did. The real question is why buyers would buy these securities? The wizards of finance who bought the mortgage-backed securities while listening to Goldman's triple-A sales line must have been willfully blind -- many of these securities were backed by immensely hazardous subprime mortgages. So why did the buyers fall for it?
They fell for it because they assumed that the federal government would prevent fraud. They fell for it for the same reason that Bernie Madoff's investors fell for his scam -- the U.S. Securities and Exchange Commission is supposed to prevent these sorts of things. We pay our taxes so that a government agency will do our research for us and ensure that sales pitches are proper and accurate. We do not want to abide by the age-old aphorism "caveat emptor" -- buyer beware. We do not want to be self-informed buyers. We want to be spoon-fed information by our investment advisers, no matter how ridiculous the information.
The only problem is that the federal government has proved itself utterly incapable of preventing fraud. Instead, the federal government provides the illusion of security to buyers while allowing sellers to do anything until proven guilty in a court of law.
The easy solution would be to reinvigorate a healthy sense of self-reliance in investors and buyers -- tell Americans to do their own research, to do business with those they trust.
President Obama's solution is to create more regulations -- regulations that will undoubtedly be ignored by bad actors and that will undoubtedly hamper honest businessmen. On Tuesday, the Huffington Post reported that the House is considering legislation, backed by Obama, that would allow the Federal Deposit Insurance Corp. (FDIC) to interfere in private derivatives contracts in cases of emergency. In short, if a company like Goldman Sachs were to buy a derivative from Morgan Stanley, and Morgan Stanley were to go under, the government could stop Goldman Sachs from collecting the derivative.
In theory, this sounds great. In practice, it creates an incentive for Morgan Stanley to sell too many risky securities. Then, if Morgan Stanley fails, the federal government would allow Morgan Stanley to skate on its financial obligations.
This all sounds far more complicated than it actually is. The bottom line is this: When the government assures market actors that they do not have to live up to their obligations -- basic obligations like research or paying their obligations -- the market collapses. That is not a failure of the free market. It is a failure of a government-perverted free market. Financial thieves are the same as all other thieves: they do not respect the law. More financial laws will not make financial liars more honest any more than gun laws prevent criminals from acquiring firearms. In fact, more financial regulations will only provide market participants the same false sense of security that brought about the current crisis.
Copyright © 2009 Salem Web Network. All Rights Reserved.
Ben Shapiro
Wednesday, November 04, 2009
President Obama says he is a fan of the free market. Back in September, Obama spoke to Wall Street. He stated, "I have always been a strong believer in the power of the free market." He then explained that he wanted common-sense regulation of the market: "Common-sense rules of the road don't hinder the market, they make the market stronger. Indeed, they are essential to ensuring that our markets function fairly and freely."
To paraphrase Spanish dueler Inigo Montoya from "The Princess Bride": President Obama, you keep using the phrase "free markets." I do not think it means what you think it means.
Here is how the free market works: open competition among sellers, informed bidding among buyers. Sellers are responsible for competing; buyers are responsible for informing themselves. When the government pledges to increase competition or keep buyers informed, the market is no longer free. And when the government makes those pledges and then fails to enforce them, the free market is utterly perverted.
AUnfortunately, President Obama's favorite "common-sense" regulations attack both sides of the free market: they restrict competition among sellers while providing false guarantees to buyers. They require that sellers charge certain prices or meet certain conditions, and they incentivize buyers not to do their research -- after all, the government will ensure that no one puts bad products into the market place, right?
Wrong. Goldman Sachs is a perfect example of how the quasi-free market championed by Obama leads to chaos. On Monday, McClatchy Newspapers reported that Goldman Sachs, the nation's leading investment bank, profited handsomely from the downturn in the housing market by falsely selling mortgage-backed securities as triple-A rated investments. The securities were actually closer to junk. In 2006 and 2007, Goldman sold more than $40 billion in mortgage-backed securities, meanwhile betting against the housing market in shady ways.
The question isn't whether Goldman committed legal fraud here, although the indicators say that Goldman did. The real question is why buyers would buy these securities? The wizards of finance who bought the mortgage-backed securities while listening to Goldman's triple-A sales line must have been willfully blind -- many of these securities were backed by immensely hazardous subprime mortgages. So why did the buyers fall for it?
They fell for it because they assumed that the federal government would prevent fraud. They fell for it for the same reason that Bernie Madoff's investors fell for his scam -- the U.S. Securities and Exchange Commission is supposed to prevent these sorts of things. We pay our taxes so that a government agency will do our research for us and ensure that sales pitches are proper and accurate. We do not want to abide by the age-old aphorism "caveat emptor" -- buyer beware. We do not want to be self-informed buyers. We want to be spoon-fed information by our investment advisers, no matter how ridiculous the information.
The only problem is that the federal government has proved itself utterly incapable of preventing fraud. Instead, the federal government provides the illusion of security to buyers while allowing sellers to do anything until proven guilty in a court of law.
The easy solution would be to reinvigorate a healthy sense of self-reliance in investors and buyers -- tell Americans to do their own research, to do business with those they trust.
President Obama's solution is to create more regulations -- regulations that will undoubtedly be ignored by bad actors and that will undoubtedly hamper honest businessmen. On Tuesday, the Huffington Post reported that the House is considering legislation, backed by Obama, that would allow the Federal Deposit Insurance Corp. (FDIC) to interfere in private derivatives contracts in cases of emergency. In short, if a company like Goldman Sachs were to buy a derivative from Morgan Stanley, and Morgan Stanley were to go under, the government could stop Goldman Sachs from collecting the derivative.
In theory, this sounds great. In practice, it creates an incentive for Morgan Stanley to sell too many risky securities. Then, if Morgan Stanley fails, the federal government would allow Morgan Stanley to skate on its financial obligations.
This all sounds far more complicated than it actually is. The bottom line is this: When the government assures market actors that they do not have to live up to their obligations -- basic obligations like research or paying their obligations -- the market collapses. That is not a failure of the free market. It is a failure of a government-perverted free market. Financial thieves are the same as all other thieves: they do not respect the law. More financial laws will not make financial liars more honest any more than gun laws prevent criminals from acquiring firearms. In fact, more financial regulations will only provide market participants the same false sense of security that brought about the current crisis.
Copyright © 2009 Salem Web Network. All Rights Reserved.
Tuesday, November 03, 2009
This is pure GOLD from Dr. Thomas Sowell:
We are incessantly being told that the cost of medical care is "too high"-- either absolutely or as a growing percentage of our incomes. But nothing that is being proposed by the government is likely to lower those costs, and much that is being proposed is almost certain to increase the costs.
There is a fundamental difference between reducing costs and simply shifting costs around, like a pea in a shell game at a carnival. Costs are not reduced simply because you pay less at a doctor's office and more in taxes-- or more in insurance premiums, or more in higher prices for other goods and services that you buy, because the government has put the costs on businesses that pass those costs on to you.
Costs are not reduced simply because you don't pay them. It would undoubtedly be cheaper for me to do without the medications that keep me alive and more vigorous in my old age than people of a similar age were in generations past.
Letting old people die would undoubtedly be cheaper than keeping them alive-- but that does not mean that the costs have gone down. It just means that we refuse to pay the costs. Instead, we pay the consequences. There is no free lunch.
Providing free lunches to people who go to hospital emergency rooms is one of the reasons for the current high costs of medical care for others. Politicians mandating what insurance companies must cover is another free lunch that leads to higher premiums for medical insurance-- and fewer people who can afford it.
Despite all the demonizing of insurance companies, pharmaceutical companies or doctors for what they charge, the fundamental costs of goods and services are the costs of producing them.
If highly paid chief executives of insurance companies or pharmaceutical companies agreed to work free of charge, it would make very little difference in the cost of insurance or medications. If doctors' incomes were cut in half, that would not lower the cost of producing doctors through years of expensive training in medical schools and hospitals, nor the overhead costs of running doctors' offices.
What it would do is reduce the number of very able people who are willing to take on the high costs of a medical education when the return on that investment is greatly reduced and the aggravations of dealing with government bureaucrats are added to the burdens of the work.
Britain has had a government-run medical system for more than half a century and it has to import doctors, including some from Third World countries where the medical training may not be the best. In short, reducing doctors' income is not reducing the cost of medical care, it is refusing to pay those costs. Like other ways of refusing to pay costs, it has consequences.
Any one of us can reduce medical costs by refusing to pay them. In our own lives, we recognize the consequences. But when someone with a gift for rhetoric tells us that the government can reduce the costs without consequences, we are ready to believe in such political miracles.
There are some ways in which the real costs of medical care can be reduced but the people who are leading the charge for a government takeover of medical care are not the least bit interested in actually reducing those costs, as distinguished from shifting the costs around or just refusing to pay them.
The high costs of "defensive medicine"-- expensive tests, medications and procedures required to protect doctors and hospitals from ruinous lawsuits, rather than to help the patients-- could be reduced by not letting lawyers get away with filing frivolous lawsuits.
If a court of law determines that the claims made in such lawsuits are bogus, then those who filed those claims could be forced to reimburse those who have been sued for all their expenses, including their attorneys' fees and the lost time of people who have other things to do. But politicians who get huge campaign contributions from lawyers are not about to pass laws to do this.
Why should they, when it is so much easier just to start a political stampede with fiery rhetoric and glittering promises?
We are incessantly being told that the cost of medical care is "too high"-- either absolutely or as a growing percentage of our incomes. But nothing that is being proposed by the government is likely to lower those costs, and much that is being proposed is almost certain to increase the costs.
There is a fundamental difference between reducing costs and simply shifting costs around, like a pea in a shell game at a carnival. Costs are not reduced simply because you pay less at a doctor's office and more in taxes-- or more in insurance premiums, or more in higher prices for other goods and services that you buy, because the government has put the costs on businesses that pass those costs on to you.
Costs are not reduced simply because you don't pay them. It would undoubtedly be cheaper for me to do without the medications that keep me alive and more vigorous in my old age than people of a similar age were in generations past.
Letting old people die would undoubtedly be cheaper than keeping them alive-- but that does not mean that the costs have gone down. It just means that we refuse to pay the costs. Instead, we pay the consequences. There is no free lunch.
Providing free lunches to people who go to hospital emergency rooms is one of the reasons for the current high costs of medical care for others. Politicians mandating what insurance companies must cover is another free lunch that leads to higher premiums for medical insurance-- and fewer people who can afford it.
Despite all the demonizing of insurance companies, pharmaceutical companies or doctors for what they charge, the fundamental costs of goods and services are the costs of producing them.
If highly paid chief executives of insurance companies or pharmaceutical companies agreed to work free of charge, it would make very little difference in the cost of insurance or medications. If doctors' incomes were cut in half, that would not lower the cost of producing doctors through years of expensive training in medical schools and hospitals, nor the overhead costs of running doctors' offices.
What it would do is reduce the number of very able people who are willing to take on the high costs of a medical education when the return on that investment is greatly reduced and the aggravations of dealing with government bureaucrats are added to the burdens of the work.
Britain has had a government-run medical system for more than half a century and it has to import doctors, including some from Third World countries where the medical training may not be the best. In short, reducing doctors' income is not reducing the cost of medical care, it is refusing to pay those costs. Like other ways of refusing to pay costs, it has consequences.
Any one of us can reduce medical costs by refusing to pay them. In our own lives, we recognize the consequences. But when someone with a gift for rhetoric tells us that the government can reduce the costs without consequences, we are ready to believe in such political miracles.
There are some ways in which the real costs of medical care can be reduced but the people who are leading the charge for a government takeover of medical care are not the least bit interested in actually reducing those costs, as distinguished from shifting the costs around or just refusing to pay them.
The high costs of "defensive medicine"-- expensive tests, medications and procedures required to protect doctors and hospitals from ruinous lawsuits, rather than to help the patients-- could be reduced by not letting lawyers get away with filing frivolous lawsuits.
If a court of law determines that the claims made in such lawsuits are bogus, then those who filed those claims could be forced to reimburse those who have been sued for all their expenses, including their attorneys' fees and the lost time of people who have other things to do. But politicians who get huge campaign contributions from lawyers are not about to pass laws to do this.
Why should they, when it is so much easier just to start a political stampede with fiery rhetoric and glittering promises?
Will the Entrepreneur Boom Miss the U.S.?
As we marvel (or worry) about the Dow reaching 10,000, let's look again at how closely the crash and recovery are tracking the 1970s. From January 1973 to December 1974--23 months--stocks fell 48%. Over 17 months (October 2007 to March 2009) stocks dropped 54%--a little faster and more dramatically, but comparable. In 1975 stocks rose 38%, in 1976 another 24%. The bounce from this year's Mar. 9 low is nearly 60%. Again, faster and bolder but roughly the same, so far.
The 1975--76 rally didn't last. What torpedoed stocks from 1977 to 1982? I would argue it was the 1976 election, which elevated an unknown, underqualified reformer named Jimmy Carter to the presidency. The 1976 election also produced 61 Democratic seats in the Senate, along with a two-thirds majority in the House.
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There wasn't much pro-market advocacy in Washington during the late 1970s. Thus, it was no surprise when the worrisome inflation that had erupted under Gerald Ford took a turn for the worse. The Carter Administration and Congress believed the Federal Reserve's job was to ensure stable employment. The result? Inflation kicked into hyperdrive and pushed up taxes by way of bracket creep. Economic activity was distorted by a witches' brew of inflation and high taxes, which meant that speculators and tax lawyers got rich while the rest scrambled.
Looks scarily familiar, doesn't it?
The saving grace of the 1970s was entrepreneurship and innovation. During that otherwise rotten decade we saw the creation of startups that remain mighty today: FedEx ( FDX - news - people ), Southwest Airlines ( LUV - news - people ), Microsoft ( MSFT - news - people ), Apple ( AAPL - news - people ), Genentech ( DNA - news - people ), Charles Schwab ( SCHW - news - people ), Oracle. In 1971 Intel ( INTC - news - people ) introduced the microprocessor, which technology futurist George Gilder calls the most important invention in the last 50 years. Silicon Valley-style venture capital emerged during the 1970s, as did venture debt, better (and unfortunately) known as junk bond financing.
Will entrepreneurs and innovation bail us out again? They're already doing so. The rub is that most of this entrepreneurship and innovation is occurring outside the U.S. Americans--the mainstream media and the political class, especially--are terribly parochial regarding this. For example:
--How many Americans have heard of Huawei, the Chinese rival of mighty Cisco ( CSCO - news - people )? Huawei was started in 1988 and will sell $30 billion in telecom gear in 2009. Cisco was started in 1984 and will do $40 billion in sales. But Huawei's recent sales trajectory is steeper. It's possible Huawei could pass Cisco during the next few years.
--Did you know that Korean automaker Hyundai achieved record sales numbers in the lousy month of August? The J.D. Power quality ratings put Hyundai solidly in the top half, which belies the image of junky Korean cars.
--Did you know that Brazil's aircraftmaker Embraer ( ERJ - news - people ) has taken the airplane press by storm with its innovative light jets, the Phenom 100 and 300? In my Oct. 5 column I quoted Cessna's CEO, Jack Pelton, as saying he's "scared to death" of Embraer.
--Are you aware that outcomes of heart bypass surgeries are as good in India as anywhere else in the world?
--Or that Singapore is willing to pay U.S. research stars in biotechnology about $715,000 in annual salary?
Entrepreneurs and innovation will once again save the economy. But this time the miracle won't happen predominantly in the U.S. Policymakers seem not to care.
Apple the Outlier
Apple is now 33 years old, yet it seems like a perpetually new company. The company's blowout performance in its fiscal Q4--and really since the iPod's launch in 2001--has everything to do with Apple's keen sense of cultural shifts, which keeps the company at the edge of new. The genius of Steve Jobs has always been to marry his solid layman's understanding of technology to his world-class design eye and preternatural understanding of cultural moods.
Apple ( AAPL - news - people ) always seems one step ahead, even when it comes from behind. Apple didn't invent the personal computer, but it made the computer personal. It didn't invent the MP3 player, but the iPod put it all together. Smart phones existed before the iPhone. The forthcoming Apple iPad (or whatever it's called) will stand on the shoulders of the Amazon Kindle.
The lesson of Apple is to think deeply about what touches customers in an enduring way. What endures is great design and product coherence--stuff that looks cool, works well and, thus, justifies higher prices. This formula works even in a recession. Apple is a secular company with a religious following. It understands that people want transcendence and hope, especially during a difficult period. Apple's products have a quality that reaches beyond the economic dirge and reminds us of what is possible.
Movies did that in the 1930s. Apple is doing it now. Which is why Apple is an outlier.
Read Rich Karlgaard's daily blog at http://blogs.forbes.com/digitalrules or e-mail him at publisher@forbes.com. See Rich Karlgaard’s new TalkBack video series at http://forbes.com/talkback.
As we marvel (or worry) about the Dow reaching 10,000, let's look again at how closely the crash and recovery are tracking the 1970s. From January 1973 to December 1974--23 months--stocks fell 48%. Over 17 months (October 2007 to March 2009) stocks dropped 54%--a little faster and more dramatically, but comparable. In 1975 stocks rose 38%, in 1976 another 24%. The bounce from this year's Mar. 9 low is nearly 60%. Again, faster and bolder but roughly the same, so far.
The 1975--76 rally didn't last. What torpedoed stocks from 1977 to 1982? I would argue it was the 1976 election, which elevated an unknown, underqualified reformer named Jimmy Carter to the presidency. The 1976 election also produced 61 Democratic seats in the Senate, along with a two-thirds majority in the House.
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There wasn't much pro-market advocacy in Washington during the late 1970s. Thus, it was no surprise when the worrisome inflation that had erupted under Gerald Ford took a turn for the worse. The Carter Administration and Congress believed the Federal Reserve's job was to ensure stable employment. The result? Inflation kicked into hyperdrive and pushed up taxes by way of bracket creep. Economic activity was distorted by a witches' brew of inflation and high taxes, which meant that speculators and tax lawyers got rich while the rest scrambled.
Looks scarily familiar, doesn't it?
The saving grace of the 1970s was entrepreneurship and innovation. During that otherwise rotten decade we saw the creation of startups that remain mighty today: FedEx ( FDX - news - people ), Southwest Airlines ( LUV - news - people ), Microsoft ( MSFT - news - people ), Apple ( AAPL - news - people ), Genentech ( DNA - news - people ), Charles Schwab ( SCHW - news - people ), Oracle. In 1971 Intel ( INTC - news - people ) introduced the microprocessor, which technology futurist George Gilder calls the most important invention in the last 50 years. Silicon Valley-style venture capital emerged during the 1970s, as did venture debt, better (and unfortunately) known as junk bond financing.
Will entrepreneurs and innovation bail us out again? They're already doing so. The rub is that most of this entrepreneurship and innovation is occurring outside the U.S. Americans--the mainstream media and the political class, especially--are terribly parochial regarding this. For example:
--How many Americans have heard of Huawei, the Chinese rival of mighty Cisco ( CSCO - news - people )? Huawei was started in 1988 and will sell $30 billion in telecom gear in 2009. Cisco was started in 1984 and will do $40 billion in sales. But Huawei's recent sales trajectory is steeper. It's possible Huawei could pass Cisco during the next few years.
--Did you know that Korean automaker Hyundai achieved record sales numbers in the lousy month of August? The J.D. Power quality ratings put Hyundai solidly in the top half, which belies the image of junky Korean cars.
--Did you know that Brazil's aircraftmaker Embraer ( ERJ - news - people ) has taken the airplane press by storm with its innovative light jets, the Phenom 100 and 300? In my Oct. 5 column I quoted Cessna's CEO, Jack Pelton, as saying he's "scared to death" of Embraer.
--Are you aware that outcomes of heart bypass surgeries are as good in India as anywhere else in the world?
--Or that Singapore is willing to pay U.S. research stars in biotechnology about $715,000 in annual salary?
Entrepreneurs and innovation will once again save the economy. But this time the miracle won't happen predominantly in the U.S. Policymakers seem not to care.
Apple the Outlier
Apple is now 33 years old, yet it seems like a perpetually new company. The company's blowout performance in its fiscal Q4--and really since the iPod's launch in 2001--has everything to do with Apple's keen sense of cultural shifts, which keeps the company at the edge of new. The genius of Steve Jobs has always been to marry his solid layman's understanding of technology to his world-class design eye and preternatural understanding of cultural moods.
Apple ( AAPL - news - people ) always seems one step ahead, even when it comes from behind. Apple didn't invent the personal computer, but it made the computer personal. It didn't invent the MP3 player, but the iPod put it all together. Smart phones existed before the iPhone. The forthcoming Apple iPad (or whatever it's called) will stand on the shoulders of the Amazon Kindle.
The lesson of Apple is to think deeply about what touches customers in an enduring way. What endures is great design and product coherence--stuff that looks cool, works well and, thus, justifies higher prices. This formula works even in a recession. Apple is a secular company with a religious following. It understands that people want transcendence and hope, especially during a difficult period. Apple's products have a quality that reaches beyond the economic dirge and reminds us of what is possible.
Movies did that in the 1930s. Apple is doing it now. Which is why Apple is an outlier.
Read Rich Karlgaard's daily blog at http://blogs.forbes.com/digitalrules or e-mail him at publisher@forbes.com. See Rich Karlgaard’s new TalkBack video series at http://forbes.com/talkback.
More good stuff in the era of hope n change...
Blue State Exodus
Joel Kotkin, 11.03.09, 12:01 AM ESTWhy the middle-class are fleeing for the hills.
 |
For the past decade a large coterie of pundits, prognosticators and their media camp followers have insisted that growth in America would be concentrated in places hip and cool, largely the bluish regions of the country.
Since the onset of the recession, which has hit many once-thriving Sun Belt hot spots, this chorus has grown bolder. The Wall Street Journal, for example, recently identified the "Next Youth-Magnet Cities" as drawn from the old "hip and cool" collection of yore: Seattle, Portland, Washington, New York and Austin, Texas.
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It's not just the young who will flock to the blue meccas, but money and business as well, according to the narrative. The future, the Atlantic assured its readers, did not belong to the rubes in the suburbs or Sun Belt, but to high-density, high-end places like New York, San Francisco and Boston.
This narrative, which has not changed much over the past decade, is misleading and largely misstated. Net migration, both before and after the Great Recession, according to analysis by the Praxis Strategy Group, has continued to be strongest to the predominately red states of the South and Intermountain West.
This seems true even for those seeking high-end jobs. Between 2006 and 2008, the metropolitan areas that enjoyed the fastest percentage shift toward educated and professional workers and industries included nominally "unhip" places like Indianapolis, Charlotte, N.C., Memphis, Tenn., Salt Lake City, Jacksonville, Fla., Tampa, Fla., and Kansas City, Mo.
The overall migration numbers are even more revealing. As was the case for much of the past decade, the biggest gainers continue to include cities such as San Antonio, Dallas and Houston. Rather than being oases for migrants, some oft-cited magnets such as New York, Boston, Los Angeles and Chicago have all suffered considerable loss of population to other regions over the past year.
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Much the same pattern emerges when you look at longer-term state demographic patterns. A recent survey by the Empire Center for New York State Policy found that the biggest net losers in terms of per capita outmigration between 2000 and 2008 were, with the exception of Louisiana, all blue state bastions. New York residents lead in terms of rate of exodus, closely followed by the District of Columbia, Michigan, Pennsylvania, Massachusetts and California.
An even greater shock to the sensibilities of the insular, Manhattan-centric media, the report found that most of the movement from the Empire State was not from the much-dissed suburbia, but from that hip and cool paragon, New York City. This can not be ascribed as a loss of the unwanted: According to the report, those leaving the city had 13% higher incomes than those coming in.
How can this be, when everyone who's smart and hip is headed to the Big Apple? This question was addressed in a report by the center-left, New York-based Center for an Urban Future. True, considerable numbers of young, educated people come to New York, but it turns out that many of them leave for the suburbs or other states as they reach their peak earning years.
Indeed, it's astonishing given the many clear improvements in New York that more residents left the five boroughs for other locales in 2006, the peak of the last boom, than in 1993, when the city was in demonstrably worse shape. In 2006, the city had a net loss of 153,828 residents through domestic out-migration, compared to a decline of 141,047 in 1993, with every borough except Brooklyn experiencing a higher number of out-migrants in 2006.
Dugg on Forbes.com
Timken, United Steel Workers in tentative pact - Forbes.com
America's 40 Most Toxic Cities
Of course, blue state boosters can point out that the exodus has slowed with the recession, as opportunities have dried up elsewhere. True, the flood of migration has slowed across the nation. Yet it has only slowed, not dried up. When the economy revives, it's likely to start flowing heavily again.
More important, the key group leaving New York and other so-called "youth-magnets" comprises the middle class, particularly families, critical to any long-term urban revival. This year's Census shows that the number of single households in New York has reached record levels; in Manhattan, more than half of all households are singles. And the Urban Future report's analysis found that even well-heeled Manhattanites with children tend to leave once they reach the age of 5 or above.
The key factor here may well be economic opportunity. Virtually all the supposedly top-ranked cities cited in this media narrative have suffered below-average job growth throughout the decade. Some, like Portland and New York, have added almost no new jobs; others like San Francisco, Boston and Chicago have actually lost positions over the past decade.
In contrast, even after the current doldrums, San Antonio, Orlando, Houston, Dallas and Phoenix all boast at least 5% more jobs now than a decade ago. Among the large-narrative magnet regions only one--government-bloated greater Washington--has enjoyed strong employment growth.
The impact of job growth on the middle class has been profound. New York City, for example, has the smallest share of middle-income families in the nation, according to a recent Brookings Institution study; its proportion of middle-income neighborhoods was smaller than that of any metropolitan area except Los Angeles.The same pattern has also emerged in what has become widely touted as America's "model city"--President Obama's adopted hometown of Chicago.
The likely reasons behind these troubling trends are things rarely discussed in "the narrative"--concerns like high costs, taxes and regulations making it tough on industries that employ the middle class. One clear culprit: out of control state spending. State spending in New York is second per capita in the nation (anomalous Alaska is first); California stands fourth and New Jersey seventh. Illinois is down the list but coming up fast. Over the past decade, while its population grew by only 7%, Illinois' spending grew by an inflation-adjusted 39%.
The problem here is more than just too-large government; it lies in how states spend their money. Massive public spending increases over the past decade in California, New Jersey, Illinois and New York have gone overwhelmingly into the pockets and pensions of public employees. It certainly has not flowed into such basic infrastructure as roads, bridges and ports that are needed to keep key industries competitive.
The American Association of State Highway Transportation, for example, ranked New York 43rd in the country and New Jersey dead last in terms of quality of roads. Some 46% of the Garden State's roads were rated in poor condition, compared with the national average of 13%, even as the state's spending reached new highs. The typical New Jersey driver spends almost $600 a year in auto repairs necessitated by the poor conditions of the roads.
In contrast, states in the South and parts of the Plains tend to pour their public resources into productive uses. Cities like Mobile, Ala., Houston, Charleston, S.C., and Savannah, Ga., have been investing in port facilities to take advantage of the planned widening of the Panama Canal. The primary goal is to take business away from the increasingly expensive, overregulated and under-invested ports of the Northeast and West Coast. Similarly, places like Kansas City and the Dakotas are looking to boost their basic rail and road networks to support export-heavy industries.
Even in the face of the Obama administration's strongly urban-centric, blue state-oriented economic policy, these generally less than hip places appear poised to grow as the economy recovers. Virtually all the top 10 economies that have withstood the recession come from outside the "youth-magnet" field: San Antonio; Oklahoma City; Little Rock, Ark.; Dallas, Baton Rouge, La.; Tulsa, Okla., Omaha, Neb.; Houston and El Paso, Texas. The one exception to this rule, Austin, also benefits from being located in solvent, generally low-tax Texas.
This continued erosion of jobs and the middle class from the blue states and cities is not inevitable. Many of these places enjoy enormous assets in terms of universities, strategic location, concentrations of talented workers and entrenched high-wage industries. But short of a massive and continuing bailout from Washington, the only way to reverse their decline will be a thorough reformation of their governmental structure and policies. No narrative, no matter how well spun, can make up for that reality.
Joel Kotkin is a distinguished presidential fellow in urban futures at Chapman University. He is executive editor of newgeography.com and writes the weekly New Geographer column for Forbes. He is working on a study on upward mobility in global cities for the London-based Legatum Institute. His next book, The Next Hundred Million: America in 2050, will be published by Penguin early next year.
Tuesday, August 25, 2009
Energy Tribune - Scientifically Illiterate and Innumerate: Why Americans Are So Easily Bamboozled About Energy
Energy Tribune - Scientifically Illiterate and Innumerate: Why Americans Are So Easily Bamboozled About Energy
Posted on Aug. 21, 2009
By Robert Bryce
Scientifically Illiterate and Innumerate: Why Americans Are So Easily Bamboozled About Energy
Two years ago, I interviewed Vaclav Smil, the prolific author and energy thinker. I asked Smil, a distinguished professor at the University of Manitoba, why Americans are so easily swayed by politicians and others when it comes to energy matters. His response: scientific illiteracy and innumeracy. “Without any physical, chemical, and biological fundamentals, and with equally poor understanding of basic economic forces, it is no wonder that people will believe anything,” he told me.
Finding evidence to support Smil’s claim is all too easy. A 2007 study by Michigan State University determined that just 28 percent of American adults could be considered scientifically literate. In February, the California Academy of Sciences released the findings of a survey which found that most Americans couldn’t pass a basic scientific literacy test. The findings:
* Just 53% of adults knew how long it takes for the Earth to revolve around the Sun.
* Just 59% knew that the earliest humans did not live at the same time as dinosaurs.
* Only 47% of adults could provide a rough estimate of the percent of the Earth's surface that is covered with water. (The Academy decided that the correct answer range for this question was anything between 65% and 75%.)
* A mere 21% were able to answer those three questions correctly.
In July, the Pew Research Center for the People & the Press released the results of a survey of 2,001 adult Americans regarding science issues. Among the findings: just 46% knew that electrons are smaller than atoms.
Those findings shouldn’t be surprising. Ignorance of the sciences and the natural world has plagued the world for centuries. This centuries-long suspicion of science, which continues today with regular attacks on Charles Darwin and his theory of evolution, was recognized by British scientist and novelist C.P. Snow in the 1950s when he delivered a famous lecture called “The Two Cultures.” Snow argued that there was a growing disconnect between the culture of the sciences and the culture of the humanities, and that bridging that gap in understanding was critical to understanding and addressing the world’s problems. Snow placed “Literary intellectuals at one pole – at the other scientists…Between the two a gulf of mutual incomprehension.” Snow then laid out a critical point about the general public’s lack of understanding of energy and thermodynamics. As Snow put it:
A good many times I have been present at gatherings of people who, by the standards of the traditional culture, are thought highly educated and who have with considerable gusto been expressing their incredulity at the illiteracy of scientists. Once or twice I have been provoked and have asked the company how many of them could describe the Second Law of Thermodynamics. The response was cold: it was also negative. Yet I was asking something which is the scientific equivalent of: Have you read a work of Shakespeare’s?
Indeed, while most moderately cultured people will be familiar with the Bard’s A Comedy of Errors or The Merchant of Venice, the laws of thermodynamics -- the rules that ruthlessly police the world of energy -- are considered by most people to be the domain of nerds and wonks. Thus, the first law of thermodynamics: energy is neither created nor destroyed; and the second law: energy tends to become more random and less available -- are relegated to the realm of too much information. For most people, basic physics is seen as nerdy, beyond their ken, too troublesome to learn.
This apathy – or perhaps it’s antipathy -- towards science makes it laughably easy for the public to be deceived. Alas, this apathy toward science in America is matched – or perhaps even exceeded – by the lack of interest in mathematics. Over the past few years, the US has been inundated with depressing data about the state of our country’s mathematical skills. A 2008 study published by the American Mathematical Society put it bluntly: “it is deemed uncool within the social context of USA middle and high schools to do mathematics.” It went on to explain that “Very few USA high schools teach the advanced mathematical skills, such as writing rigorous essay-style proofs, needed to excel.” Another report issued in 2008, this one from the Department of Education’s National Mathematics Advisory Panel declared that math education in the U.S. “is broken and must be fixed.” The report found “that 27% of eighth-graders could not correctly shade 1/3 of a rectangle and 45% could not solve a word problem that required dividing fractions.” The report also found poor math skills among adults:
* 78% of adults could not explain how to compute the interest paid on a loan.
* 71% couldn’t calculate miles per gallon on a trip.
* 58% were unable to calculate a 10% tip for a lunch bill.
Given these disheartening numbers, there’s little reason to be surprised that so many Americans are ready to embrace fallacious claims by the many energy charlatans who insist that the US could quit using hydrocarbons if only there were more political will to do so. Those claims ignore the vast scale of US energy consumption. On an average day, the US consumes about 41 million barrels of oil equivalent in the form of oil, natural gas, and coal. That’s nearly five times as much energy as is produced by Saudi Arabia in the form of oil on an average day. (Since 1973 the Saudis have pumped an average of about 8.3 million barrels per day).
It has taken the US more than a century to build a $14 trillion economy – an economy that is based almost entirely on abundant supplies of oil, coal, and natural gas. No matter what energy technologies come along in the near future – electric cars, solar panels, wind turbines, etc. -- moving the US and world economies away from hydrocarbons will take most of the 21st century.
That’s the reality – and it doesn’t take a calculator to confirm it.
Posted on Aug. 21, 2009
By Robert Bryce
Scientifically Illiterate and Innumerate: Why Americans Are So Easily Bamboozled About Energy
Two years ago, I interviewed Vaclav Smil, the prolific author and energy thinker. I asked Smil, a distinguished professor at the University of Manitoba, why Americans are so easily swayed by politicians and others when it comes to energy matters. His response: scientific illiteracy and innumeracy. “Without any physical, chemical, and biological fundamentals, and with equally poor understanding of basic economic forces, it is no wonder that people will believe anything,” he told me.
Finding evidence to support Smil’s claim is all too easy. A 2007 study by Michigan State University determined that just 28 percent of American adults could be considered scientifically literate. In February, the California Academy of Sciences released the findings of a survey which found that most Americans couldn’t pass a basic scientific literacy test. The findings:
* Just 53% of adults knew how long it takes for the Earth to revolve around the Sun.
* Just 59% knew that the earliest humans did not live at the same time as dinosaurs.
* Only 47% of adults could provide a rough estimate of the percent of the Earth's surface that is covered with water. (The Academy decided that the correct answer range for this question was anything between 65% and 75%.)
* A mere 21% were able to answer those three questions correctly.
In July, the Pew Research Center for the People & the Press released the results of a survey of 2,001 adult Americans regarding science issues. Among the findings: just 46% knew that electrons are smaller than atoms.
Those findings shouldn’t be surprising. Ignorance of the sciences and the natural world has plagued the world for centuries. This centuries-long suspicion of science, which continues today with regular attacks on Charles Darwin and his theory of evolution, was recognized by British scientist and novelist C.P. Snow in the 1950s when he delivered a famous lecture called “The Two Cultures.” Snow argued that there was a growing disconnect between the culture of the sciences and the culture of the humanities, and that bridging that gap in understanding was critical to understanding and addressing the world’s problems. Snow placed “Literary intellectuals at one pole – at the other scientists…Between the two a gulf of mutual incomprehension.” Snow then laid out a critical point about the general public’s lack of understanding of energy and thermodynamics. As Snow put it:
A good many times I have been present at gatherings of people who, by the standards of the traditional culture, are thought highly educated and who have with considerable gusto been expressing their incredulity at the illiteracy of scientists. Once or twice I have been provoked and have asked the company how many of them could describe the Second Law of Thermodynamics. The response was cold: it was also negative. Yet I was asking something which is the scientific equivalent of: Have you read a work of Shakespeare’s?
Indeed, while most moderately cultured people will be familiar with the Bard’s A Comedy of Errors or The Merchant of Venice, the laws of thermodynamics -- the rules that ruthlessly police the world of energy -- are considered by most people to be the domain of nerds and wonks. Thus, the first law of thermodynamics: energy is neither created nor destroyed; and the second law: energy tends to become more random and less available -- are relegated to the realm of too much information. For most people, basic physics is seen as nerdy, beyond their ken, too troublesome to learn.
This apathy – or perhaps it’s antipathy -- towards science makes it laughably easy for the public to be deceived. Alas, this apathy toward science in America is matched – or perhaps even exceeded – by the lack of interest in mathematics. Over the past few years, the US has been inundated with depressing data about the state of our country’s mathematical skills. A 2008 study published by the American Mathematical Society put it bluntly: “it is deemed uncool within the social context of USA middle and high schools to do mathematics.” It went on to explain that “Very few USA high schools teach the advanced mathematical skills, such as writing rigorous essay-style proofs, needed to excel.” Another report issued in 2008, this one from the Department of Education’s National Mathematics Advisory Panel declared that math education in the U.S. “is broken and must be fixed.” The report found “that 27% of eighth-graders could not correctly shade 1/3 of a rectangle and 45% could not solve a word problem that required dividing fractions.” The report also found poor math skills among adults:
* 78% of adults could not explain how to compute the interest paid on a loan.
* 71% couldn’t calculate miles per gallon on a trip.
* 58% were unable to calculate a 10% tip for a lunch bill.
Given these disheartening numbers, there’s little reason to be surprised that so many Americans are ready to embrace fallacious claims by the many energy charlatans who insist that the US could quit using hydrocarbons if only there were more political will to do so. Those claims ignore the vast scale of US energy consumption. On an average day, the US consumes about 41 million barrels of oil equivalent in the form of oil, natural gas, and coal. That’s nearly five times as much energy as is produced by Saudi Arabia in the form of oil on an average day. (Since 1973 the Saudis have pumped an average of about 8.3 million barrels per day).
It has taken the US more than a century to build a $14 trillion economy – an economy that is based almost entirely on abundant supplies of oil, coal, and natural gas. No matter what energy technologies come along in the near future – electric cars, solar panels, wind turbines, etc. -- moving the US and world economies away from hydrocarbons will take most of the 21st century.
That’s the reality – and it doesn’t take a calculator to confirm it.
Monday, August 24, 2009
Want To Curb Market Speculation? - Forbes.com
Want To Curb Market Speculation? - Forbes.comPolitical Economy
Want To Curb Market Speculation?
John Tamny, 08.24.09, 12:01 AM ET
Want To Curb Market Speculation?
John Tamny, 08.24.09, 12:01 AM ET
Back in 2002 and in the aftermath of the Enron and Worldcom implosions, former Sen. Paul Sarbanes, D-Md., and former Rep. Mike Oxley, R-Ohio, created the Sarbanes-Oxley bill, meant to curb allegedly funny accounting and business practices. As President George W. Bush asserted in signing the bill, "There will not be a different ethical standard for corporate America than the standard that applies to everyone else."
Nice political theater for sure, but then reality set in.
Fast-forward four years, and the joke was on politicians naïve enough to believe that corporations with aspirations of going public would lie prostrate before tough new accounting rules. Most--to the extent that they did go public--just floated their shares overseas.
Indeed, as Sen. Charles Schumer, D-N.Y., and New York Mayor Michael Bloomberg observed in a 2006 op-ed for The Wall Street Journal, "In 2005, only one out of the top 24 IPOs was registered in the U.S., and four were registered in London." In particular, they cited "auditing expenses for companies doing business in the U.S. [that] have grown far beyond anything Congress had anticipated," along with "a worrisome trend of corporate leaders focusing inordinate time on compliance minutiae rather than innovative strategies for growth, for fear of facing personal financial penalties from overzealous regulators."
So while the political class was eager to turn company CEOs into accountants rather than innovators, public-company heads had different ideas. Not excited by the idea of suffering under overdone legislation made in politicized haste, they simply went public on non-U.S. exchanges.
What Washington misunderstood back in 2002 was that finance is very much global, with the dollar the world’s currency. Two-thirds of all dollars are presently overseas, so if restraints are put on stateside investment--and those invested stateside--overseas markets are more than willing to take business that politicians and bureaucrats drive away with excessive rules.
This is important now when we consider the growing desire in Washington to impose curbs on commodity speculation, short-selling, high-frequency trading, derivatives and executive pay. While some of us might see the appeal of greater oversight in certain areas, new regulations will do little to change what we don’t like, while driving a great deal of business overseas.
Commodities have been both rising and volatile much of this decade, thanks to a weak and unstable dollar. With commodities priced in dollars, the greenback’s weakness and undefined nature has made commodity prices expensive and a moving target in terms of price.
Seeking to shift attention away from its unwillingness to follow its constitutional mandate when it comes to issuing a stable dollar, Congress has empowered regulators to enact curbs on commodities "speculators," as though the latter somehow control the prices of gold, oil, copper and natural gas (to name a few). This act will no doubt please some of the voters back home, but it will be toothless when it comes to making commodities cheaper and less volatile.
If U.S. regulations succeed in inhibiting commodity speculation on U.S. exchanges, the trades will simply move elsewhere. As the Wall Street Journal recently reported, the U.S. Natural Gas Fund, a $4.5 billion exchange-traded fund, "is considering moving to offshore energy exchanges or further into unpoliced over-the-counter swaps markets to avoid Commodity Futures Trading Commission rules that would limit the size of its natural-gas positions." In short, foreign and unregulated exchanges will gladly take the trades regulators seek to drive away.
Short-sellers have similarly garnered a lot of criticism in a difficult two years for stocks. Despite the fact that short-sellers put a floor under bear markets for closing short positions when stocks decline, certain politicians, regulators and company CEOs want their activities banned to varying degrees. Even if we ignore how unfortunate the banning of short-sellers would be for the markets that need to be efficiently priced, we shouldn’t worry too much. Once again, foreign exchanges will gladly bring rationality to prices where U.S. exchanges will not.
High-frequency trading has also attracted a lot of attention. The biggest investors are able to complete purchases and sales of shares ahead of the small investor, so critics say. It is, however, rarely mentioned that large institutions frequently invest the funds of the little guy, but whatever the origin of their funds, this is much ado about nothing. Assuming politicians succeed in taxing away a trading technique that makes markets more efficient, the trades, according to former SEC Chairman Arthur Levitt, will simply move "to foreign markets."
Treasury Secretary Tim Geithner has made a lot of noise about restricting derivatives trading, not to mention Wall Street’s compensation structure. But Geithner’s efforts will prove as wanting as others meant to blunt natural market forces. Indeed, Wall Street is no longer a location as much as a worldwide symbol of finance. Attempts to rein in trading or compensation only mean esoteric transactions will move to foreign markets, while workers in the financial space will shift their skills to firms, in the U.S. and elsewhere, not regulated by Treasury.
What all of this means is that a dollar in New York is the same as a dollar in London or Shanghai. So while regulators and politicians may have designs to regulate and legislate away what they don’t like, the fungible nature of finance means their efforts will always amount to nothing. At best, these vain efforts to restrain market forces will backfire, given the certainty that others uninhibited by Washington will gladly do what we’re not allowed to do.
John Tamny is editor of RealClearMarkets, a senior economist with H.C. Wainwright Economics and a senior economic adviser to Toreador Research and Trading. He writes a weekly column for Forbes.
Thursday, August 13, 2009
Monday, July 13, 2009
Sunday, June 28, 2009
Watch it Sucka!!!
May 20, 2009
Revolution
By Herbert E. Meyer
During the last 30 years we Americans have been so politically divided that some of us have called this left-right, liberal-conservative split a "culture war" or even a "second Civil War." These descriptions are no longer accurate. The precise, technical word for what is happening in the United States today is revolution.
Because of our country's history, we tend to think of revolutions as military conflicts, and of the revolutionaries as the good guys; the image of Minutemen fighting valiantly against the British forces at Lexington and Concord lies deep within our DNA. But sometimes -- quite often, actually -- revolutions aren't military conflicts, and the good guys are the ones trying to keep the revolution from happening. In January 1933, Adolf Hitler was appointed chancellor of Germany by its elected president; he would spend the next two years consolidating his power with the legislative connivance of his political allies in the Reichstag. In October 1917, Lenin and his Bolsheviks took control of Russia from Kerensky and his Social Democrats -- who had overthrown the Czar earlier that year -- entirely through parliamentary maneuvering in Russia's fledgling Duma.
What defines a revolution -- and this is the crucial point to grasp -- is that when it's over a country has changed not merely its leaders and its laws, but its operating system.
Since most of us think of computers when we hear the phrase "operating system" let me use this analogy to illuminate my point: Every computer has an operating system, and most of us are using either the Microsoft or the Apple operating system. If you want to do something with your computer -- send an email, watch a DVD, read an online essay like this one -- you must do it the way your computer's operating system is designed to work.
No operating system is perfect, which is why Microsoft and Apple send updates to their customers from time to time. And every so often these companies launch new versions of their operating systems that incorporate a lot of modifications at once. Can you change the operating system you use? Of course you can. Two years ago I threw out every Microsoft-based machine in our company's office and replaced them with Apple products. Last month I met a corporate CEO who had just done the opposite, and replaced the Apple computers in his office with ones that run on the Microsoft operating system.
Democracies and Dictatorships
Now, just as computers have operating systems so too do countries. In fact, countries have dual operating systems - one political and the other economic. Broadly speaking, there are two kinds of each: Politically you can be a democracy or a dictatorship, and economically you can have either a free market or a command economy. Because countries don't buy their operating systems off the shelf, the way we buy our computer operating systems, each country develops its own versions. This is why our country's democracy is somewhat different from Canada's, which in turn is slightly different from Australia's, and so forth. These countries all have free-market economies, but again they aren't quite the same. Still, the similarities among democracies and free-market economies are more striking than the differences. Likewise, while no two dictatorships are the same, and no two command economies work in exactly the same way, the differences among them are comparatively trivial.
Since no country's operating systems are perfect, can they be improved? Of course they can. Every time our Congress passes a new law, or enacts a new regulation -- or whenever the Supreme Court issues an opinion -- that's the equivalent of an update to our political or economic operating system. Can you change a country's operating system? Yes, you can. And the precise, technical word for replacing one political or economic operating system with another is -- revolution.
When politics in a democracy is normal, the political parties all agree to preserve the operating system while they compete to improve it. This is what is actually happening when one party in Congress introduces a new piece of healthcare or education legislation and the other party opposes it or introduces its own healthcare or education bill, or when two candidates for the Senate argue over whether or not to change our immigration laws. Honorable people often will disagree about what to do -- sometimes quite strongly, just as the software engineers at Microsoft and Apple will sometimes argue through the night about whether a proposed change in the operating system's code is an improvement or just "kludge." But in normal politics the outer limits of all these disagreements are marked by a shared commitment to preserving and improving the operating system.
In abnormal politics, the objective of one party isn't to improve the operating system, but to overthrow it.
With this analogy in mind, now we can see clearly what's been happening in the United States during the last three decades. While conservatives have been working to improve our democracy and our free-market economy, liberals have been working to replace our democracy with a dictatorship, and our free-market economy with a command economy controlled by the government. The liberals couldn't say this aloud, because if they did the American people would have tossed them out of office on their ears. So the liberals worked covertly, feigning support for democracy and for the free market while working diligently to undermine both.
This is why our politics has been so partisan, so vicious, and so deadlocked. This is why words have lost their meaning in Washington, why we can never get to the bottom of anything, why we lurch from one manufactured scandal to another. It's all been part of a decades-long effort by the liberals to throw sand in our eyes -- to keep us from seeing clearly where they really want to take us. (And this explains why, when we question their judgment on some issue, they go berserk and accuse us of questioning their patriotism. They're afraid we're on the verge of catching on. If you want to have some fun, the next time you're chatting with a liberal and he goes nuts when you call him a socialist, say to him: "I'm so sorry you're offended. Please tell me, what is there about socialism you don't like?" You won't get a coherent answer; he'll just accuse you of a hate crime.)
Obama's Two-Front Offensive
With the election of Barack Obama as president, the liberals have launched a massive, two-front offensive they believe will end in victory. They have judged that our public education system is so degraded that only a few Americans are left who even understand what a democracy is, and how the free market actually works. They are convinced that the majority of Americans are too frightened by the current recession to care about preserving the principles that made us the most powerful, productive and innovative country the world has ever known. In short, the liberals are reaching for victory because they believe that history now is on their side.
The speed of their offensive is breathtaking.
At the core of democracy is the rule of law, and we have already lost it. The liberals lecture us incessantly that everything is "relative," but that's not true; some things are absolutes. You cannot claim to be faithful to your spouse because you never cheat on her -- except when you're in London on business. And you cannot claim to have the rule of law if the government can set aside the rule of law when it decides that "special circumstances" have arisen that warrant illegality. When the President and his aides handed ownership of Chrysler Corp. to the United Auto Workers union, they tried to avoid sending that beleaguered company into bankruptcy by muscling its bondholders into accepting less money for their assets than the law entitled them to collect. These contracts, and the law under which they were signed, were mere obstacles to a thuggish President bent on paying off his political supporters.
It's going to get much worse, fast. President Obama has told us time and again that among his criteria for choosing Federal judges will be "empathy." Empathy is a wonderful quality in any human being, but a judge's job is to rule according to the law. Once our courts are presided over by judges who will reach verdicts based on how they feel about an issue -- such as abortion or the right of citizens to bear arms -- the law will be whatever the judges wish it to be; the rule of law will become an empty phrase rather than the architecture of our civilization.
We have lost our free-market economy as quickly as we have lost the rule of law. Money is to an economy what blood is to a body; life and death resides within the organ that controls its flow. The government already owns our country's leading banks, which means the government now controls our economy. (And in all fairness to President Obama, it was the Bush administration that started us down this ghastly road.) One indicator of the Obama administration's real objective: When some banks that had taken federal money attempted to repay their loans, the Treasury Department refused to accept repayment and step aside. This shows the government's goal isn't to prop up the banks, but rather to control them.
Here, too, things are going to get much worse, fast. The government now owns General Motors Corp., is reaching for control of insurance companies, and has launched plans to take over our country's healthcare industry. It even wants authority to set the salaries of executives in industries that, at least for now, aren't being subsidized or underwritten by the government.
Put all this together, and what we have in our country today isn't a democracy and it isn't a free-market economy. Reader, what we have now is a revolution.
This revolution won't be stopped, and our country won't be rescued, by the Republicans in Washington. This isn't because they lack the votes. It's because most of them are careerist hacks who've been playing footsie with the Democrats for too long; with very few exceptions they lack the intellectual firepower to articulate the present danger, and the political courage to stand up to this Administration and really fight. But for the absence of frock coats and pince-nez glasses, these Republicans in Washington remind me of those bumbling Weimar Republic politicians in Berlin who never grasped where Hitler and the Nazis were going until it was too late to stop them, or of those hapless Mensheviks in Moscow's Duma who let themselves be tossed into history's dustbin by Lenin and his Bolsheviks. (Yes, of course I realize it's explosive to keep bringing up the Nazis and the Bolsheviks in an essay about the Democrats. I'm not doing this to be incendiary; I'm doing this to be accurate.)
The Future's in Our Hands
Our country's future now lies within our own hands -- yours, mine, all of us who comprise what the Washington insiders sneeringly call the grass roots. Good, because unless I'm very much mistaken the liberals have over-estimated their strength. There still are more of us than there are of them. I mean ordinary, decent Americans from across the political spectrum who may disagree about specific issues, but who understand who we are and how we became who we are; who love our country, have a genius for self-organizing, and won't let the United States go down without a fight.
We need to launch a counter-offensive, so to speak, and the place to start is at the local level. Working with our county and state political parties when we can -- or working around them when we must -- our objective will be to elect as many people as we can to public office who understand what a democracy is and how the free market works. This will include city council members, county commissioners, school board members, judges, sheriffs and even members of the local parks commission. With the strength and political momentum their elections will provide, we can surge to the state level and then -- before it's too late -- take back the power in Washington DC.
I know this isn't the kind of battle most of us want to fight; we would rather watch the talking heads slug it out on Fox News than stand on a street corner handing out campaign flyers. And given our country's history, for a while it will be uncomfortable to find ourselves fighting against the revolution and for the status quo. But we'll get used to this as we make our case over and over again -- to our friends, our neighbors, at barbeques and PTA meetings and at public rallies like those marvelous April tea parties that drove the liberals insane. And we'll draw strength as our ranks swell with new recruits.
The alternative to launching this kind of peaceful and political counter-attack is horrific. Right now sales of guns and ammunition are rising sharply. This reflects an intuitive grasp by grass-roots Americans of what history teaches may lie ahead. It was only after the Nazis had secured their grip on power in Germany, and only after the Bolsheviks had seized control of Russia, that they set out to disarm and destroy the vast numbers of ordinary citizens who - to the astonishment and fury of the revolutionaries -- just wouldn't go along.
That's when the real shooting started, and when blood began flowing in the streets.
Herbert E. Meyer served during the Reagan Administration as Special Assistant to the Director of Central Intelligence and Vice Chairman of the CIA's National Intelligence Council. He holds the U.S. National Intelligence Distinguished Service Medal, which is the Intelligence Community's highest honor. He is author of The Cure for Poverty and How to
About Us | Contact © American Thinker 2009
Revolution
By Herbert E. Meyer
During the last 30 years we Americans have been so politically divided that some of us have called this left-right, liberal-conservative split a "culture war" or even a "second Civil War." These descriptions are no longer accurate. The precise, technical word for what is happening in the United States today is revolution.
Because of our country's history, we tend to think of revolutions as military conflicts, and of the revolutionaries as the good guys; the image of Minutemen fighting valiantly against the British forces at Lexington and Concord lies deep within our DNA. But sometimes -- quite often, actually -- revolutions aren't military conflicts, and the good guys are the ones trying to keep the revolution from happening. In January 1933, Adolf Hitler was appointed chancellor of Germany by its elected president; he would spend the next two years consolidating his power with the legislative connivance of his political allies in the Reichstag. In October 1917, Lenin and his Bolsheviks took control of Russia from Kerensky and his Social Democrats -- who had overthrown the Czar earlier that year -- entirely through parliamentary maneuvering in Russia's fledgling Duma.
What defines a revolution -- and this is the crucial point to grasp -- is that when it's over a country has changed not merely its leaders and its laws, but its operating system.
Since most of us think of computers when we hear the phrase "operating system" let me use this analogy to illuminate my point: Every computer has an operating system, and most of us are using either the Microsoft or the Apple operating system. If you want to do something with your computer -- send an email, watch a DVD, read an online essay like this one -- you must do it the way your computer's operating system is designed to work.
No operating system is perfect, which is why Microsoft and Apple send updates to their customers from time to time. And every so often these companies launch new versions of their operating systems that incorporate a lot of modifications at once. Can you change the operating system you use? Of course you can. Two years ago I threw out every Microsoft-based machine in our company's office and replaced them with Apple products. Last month I met a corporate CEO who had just done the opposite, and replaced the Apple computers in his office with ones that run on the Microsoft operating system.
Democracies and Dictatorships
Now, just as computers have operating systems so too do countries. In fact, countries have dual operating systems - one political and the other economic. Broadly speaking, there are two kinds of each: Politically you can be a democracy or a dictatorship, and economically you can have either a free market or a command economy. Because countries don't buy their operating systems off the shelf, the way we buy our computer operating systems, each country develops its own versions. This is why our country's democracy is somewhat different from Canada's, which in turn is slightly different from Australia's, and so forth. These countries all have free-market economies, but again they aren't quite the same. Still, the similarities among democracies and free-market economies are more striking than the differences. Likewise, while no two dictatorships are the same, and no two command economies work in exactly the same way, the differences among them are comparatively trivial.
Since no country's operating systems are perfect, can they be improved? Of course they can. Every time our Congress passes a new law, or enacts a new regulation -- or whenever the Supreme Court issues an opinion -- that's the equivalent of an update to our political or economic operating system. Can you change a country's operating system? Yes, you can. And the precise, technical word for replacing one political or economic operating system with another is -- revolution.
When politics in a democracy is normal, the political parties all agree to preserve the operating system while they compete to improve it. This is what is actually happening when one party in Congress introduces a new piece of healthcare or education legislation and the other party opposes it or introduces its own healthcare or education bill, or when two candidates for the Senate argue over whether or not to change our immigration laws. Honorable people often will disagree about what to do -- sometimes quite strongly, just as the software engineers at Microsoft and Apple will sometimes argue through the night about whether a proposed change in the operating system's code is an improvement or just "kludge." But in normal politics the outer limits of all these disagreements are marked by a shared commitment to preserving and improving the operating system.
In abnormal politics, the objective of one party isn't to improve the operating system, but to overthrow it.
With this analogy in mind, now we can see clearly what's been happening in the United States during the last three decades. While conservatives have been working to improve our democracy and our free-market economy, liberals have been working to replace our democracy with a dictatorship, and our free-market economy with a command economy controlled by the government. The liberals couldn't say this aloud, because if they did the American people would have tossed them out of office on their ears. So the liberals worked covertly, feigning support for democracy and for the free market while working diligently to undermine both.
This is why our politics has been so partisan, so vicious, and so deadlocked. This is why words have lost their meaning in Washington, why we can never get to the bottom of anything, why we lurch from one manufactured scandal to another. It's all been part of a decades-long effort by the liberals to throw sand in our eyes -- to keep us from seeing clearly where they really want to take us. (And this explains why, when we question their judgment on some issue, they go berserk and accuse us of questioning their patriotism. They're afraid we're on the verge of catching on. If you want to have some fun, the next time you're chatting with a liberal and he goes nuts when you call him a socialist, say to him: "I'm so sorry you're offended. Please tell me, what is there about socialism you don't like?" You won't get a coherent answer; he'll just accuse you of a hate crime.)
Obama's Two-Front Offensive
With the election of Barack Obama as president, the liberals have launched a massive, two-front offensive they believe will end in victory. They have judged that our public education system is so degraded that only a few Americans are left who even understand what a democracy is, and how the free market actually works. They are convinced that the majority of Americans are too frightened by the current recession to care about preserving the principles that made us the most powerful, productive and innovative country the world has ever known. In short, the liberals are reaching for victory because they believe that history now is on their side.
The speed of their offensive is breathtaking.
At the core of democracy is the rule of law, and we have already lost it. The liberals lecture us incessantly that everything is "relative," but that's not true; some things are absolutes. You cannot claim to be faithful to your spouse because you never cheat on her -- except when you're in London on business. And you cannot claim to have the rule of law if the government can set aside the rule of law when it decides that "special circumstances" have arisen that warrant illegality. When the President and his aides handed ownership of Chrysler Corp. to the United Auto Workers union, they tried to avoid sending that beleaguered company into bankruptcy by muscling its bondholders into accepting less money for their assets than the law entitled them to collect. These contracts, and the law under which they were signed, were mere obstacles to a thuggish President bent on paying off his political supporters.
It's going to get much worse, fast. President Obama has told us time and again that among his criteria for choosing Federal judges will be "empathy." Empathy is a wonderful quality in any human being, but a judge's job is to rule according to the law. Once our courts are presided over by judges who will reach verdicts based on how they feel about an issue -- such as abortion or the right of citizens to bear arms -- the law will be whatever the judges wish it to be; the rule of law will become an empty phrase rather than the architecture of our civilization.
We have lost our free-market economy as quickly as we have lost the rule of law. Money is to an economy what blood is to a body; life and death resides within the organ that controls its flow. The government already owns our country's leading banks, which means the government now controls our economy. (And in all fairness to President Obama, it was the Bush administration that started us down this ghastly road.) One indicator of the Obama administration's real objective: When some banks that had taken federal money attempted to repay their loans, the Treasury Department refused to accept repayment and step aside. This shows the government's goal isn't to prop up the banks, but rather to control them.
Here, too, things are going to get much worse, fast. The government now owns General Motors Corp., is reaching for control of insurance companies, and has launched plans to take over our country's healthcare industry. It even wants authority to set the salaries of executives in industries that, at least for now, aren't being subsidized or underwritten by the government.
Put all this together, and what we have in our country today isn't a democracy and it isn't a free-market economy. Reader, what we have now is a revolution.
This revolution won't be stopped, and our country won't be rescued, by the Republicans in Washington. This isn't because they lack the votes. It's because most of them are careerist hacks who've been playing footsie with the Democrats for too long; with very few exceptions they lack the intellectual firepower to articulate the present danger, and the political courage to stand up to this Administration and really fight. But for the absence of frock coats and pince-nez glasses, these Republicans in Washington remind me of those bumbling Weimar Republic politicians in Berlin who never grasped where Hitler and the Nazis were going until it was too late to stop them, or of those hapless Mensheviks in Moscow's Duma who let themselves be tossed into history's dustbin by Lenin and his Bolsheviks. (Yes, of course I realize it's explosive to keep bringing up the Nazis and the Bolsheviks in an essay about the Democrats. I'm not doing this to be incendiary; I'm doing this to be accurate.)
The Future's in Our Hands
Our country's future now lies within our own hands -- yours, mine, all of us who comprise what the Washington insiders sneeringly call the grass roots. Good, because unless I'm very much mistaken the liberals have over-estimated their strength. There still are more of us than there are of them. I mean ordinary, decent Americans from across the political spectrum who may disagree about specific issues, but who understand who we are and how we became who we are; who love our country, have a genius for self-organizing, and won't let the United States go down without a fight.
We need to launch a counter-offensive, so to speak, and the place to start is at the local level. Working with our county and state political parties when we can -- or working around them when we must -- our objective will be to elect as many people as we can to public office who understand what a democracy is and how the free market works. This will include city council members, county commissioners, school board members, judges, sheriffs and even members of the local parks commission. With the strength and political momentum their elections will provide, we can surge to the state level and then -- before it's too late -- take back the power in Washington DC.
I know this isn't the kind of battle most of us want to fight; we would rather watch the talking heads slug it out on Fox News than stand on a street corner handing out campaign flyers. And given our country's history, for a while it will be uncomfortable to find ourselves fighting against the revolution and for the status quo. But we'll get used to this as we make our case over and over again -- to our friends, our neighbors, at barbeques and PTA meetings and at public rallies like those marvelous April tea parties that drove the liberals insane. And we'll draw strength as our ranks swell with new recruits.
The alternative to launching this kind of peaceful and political counter-attack is horrific. Right now sales of guns and ammunition are rising sharply. This reflects an intuitive grasp by grass-roots Americans of what history teaches may lie ahead. It was only after the Nazis had secured their grip on power in Germany, and only after the Bolsheviks had seized control of Russia, that they set out to disarm and destroy the vast numbers of ordinary citizens who - to the astonishment and fury of the revolutionaries -- just wouldn't go along.
That's when the real shooting started, and when blood began flowing in the streets.
Herbert E. Meyer served during the Reagan Administration as Special Assistant to the Director of Central Intelligence and Vice Chairman of the CIA's National Intelligence Council. He holds the U.S. National Intelligence Distinguished Service Medal, which is the Intelligence Community's highest honor. He is author of The Cure for Poverty and How to
About Us | Contact © American Thinker 2009
Friday, June 26, 2009
Things that make you go Hmmm...
June 25, 2009
Obama, the African Colonial
By L.E. Ikenga
Had Americans been able to stop obsessing over the color of Barack Obama's skin and instead paid more attention to his cultural identity, maybe he would not be in the White House today. The key to understanding him lies with his identification with his father, and his adoption of a cultural and political mindset rooted in postcolonial Africa.
Like many educated intellectuals in postcolonial Africa, Barack Hussein Obama, Sr. was enraged at the transformation of his native land by its colonial conqueror. But instead of embracing the traditional values of his own tribal cultural past, he embraced an imported Western ideology, Marxism. I call such frustrated and angry modern Africans who embrace various foreign "isms", instead of looking homeward for repair of societies that are broken, African Colonials. They are Africans who serve foreign ideas.
The tropes of America's racial history as a way of understanding all things black are useless in understanding the man who got his dreams from his father, a Kenyan exemplar of the African Colonial.
Before I continue, I need to say this: I am a first generation born West African-American woman whose parents emigrated to the U.S. in the 1970's from the country now called Nigeria. I travel to Nigeria frequently. I see myself as both a proud American and as a proud Igbo (the tribe that we come from -- also sometimes spelled Ibo). Politically, I have always been conservative (though it took this past election for me to commit to this once and for all!); my conservative values come from my Igbo heritage and my place of birth. Of course, none of this qualifies me to say what I am about to -- but at the same time it does.
My friends, despite what CNN and the rest are telling you, Barack Obama is nothing more than an old school African Colonial who is on his way to turning this country into one of the developing nations that you learn about on the National Geographic Channel. Many conservative (East, West, South, North) African-Americans like myself -- those of us who know our history -- have seen this movie before. Here are two main reasons why many Americans allowed Obama to slip through the cracks despite all of his glaring inconsistencies:
First, Obama has been living on American soil for most of his adult life. Therefore, he has been able to masquerade as one who understands and believes in American democratic ideals. But he does not. Barack Obama is intrinsically undemocratic and as his presidency plays out, this will become more obvious. Second, and most importantly, too many Americans know very little about Africa. The one-size-fits-all understanding that many Americans (both black and white) continue to have of Africa might end up bringing dire consequences for this country.
Contrary to the way it continues to be portrayed in mainstream Western culture, Africa is not a continent that can be solely defined by AIDS, ethnic rivalries, poverty and safaris. Africa, like any other continent, has an immense history defined by much diversity and complexity. Africa's long-standing relationship with Europe speaks especially to some of these complexities -- particularly the relationship that has existed between the two continents over the past two centuries. Europe's complete colonization of Africa during the nineteenth century, also known as the Scramble for Africa, produced many unfortunate consequences, the African colonial being one of them.
The African colonial (AC) is a person who by means of their birth or lineage has a direct connection with Africa. However, unlike Africans like me, their worldviews have been largely shaped not by the indigenous beliefs of a specific African tribe but by the ideals of the European imperialism that overwhelmed and dominated Africa during the colonial period. AC's have no real regard for their specific African traditions or histories. AC's use aspects of their African culture as one would use pieces of costume jewelry: things of little or no value that can be thoughtlessly discarded when they become a negative distraction, or used on a whim to decorate oneself in order to seem exotic. (Hint: Obama's Muslim heritage).
On the other hand, AC's strive to be the best at the culture that they inherited from Europe. Throughout the West, they are tops in their professions as lawyers, doctors, engineers, Ivy League professors and business moguls; this is all well and good. It's when they decide to engage us as politicians that things become messy and convoluted.
The African colonial politician (ACP) feigns repulsion towards the hegemonic paradigms of Western civilization. But at the same time, he is completely enamored of the trappings of its aristocracy or elite culture. The ACP blames and caricatures whitey to no end for all that has gone wrong in the world. He convinces the masses that various forms of African socialism are the best way for redressing the problems that European colonialism motivated in Africa. However, as opposed to really being a hard-core African Leftist who actually believes in something, the ACP uses socialist themes as a way to disguise his true ambitions: a complete power grab whereby the "will of the people" becomes completely irrelevant.
Barack Obama is all of the above. The only difference is that he is here playing (colonial) African politics as usual.
In his 1995 memoir, Dreams From My Father -- an eloquent piece of political propaganda -- Obama styles himself as a misunderstood intellectual who is deeply affected by the sufferings of black people, especially in America and Africa. In the book, Obama clearly sees himself as an African, not as a black American. And to prove this, he goes on a quest to understand his Kenyan roots. He is extremely thoughtful of his deceased father's legacy; this provides the main clue for understanding Barack Obama.
Barack Obama Sr. was an African colonial to the core; in his case, the apple did not fall far from the tree. All of the telltale signs of Obama's African colonialist attitudes are on full display in the book -- from his feigned antipathy towards Europeans to his view of African tribal associations as distracting elements that get in the way of "progress". (On p. 308 of Dreams From My Father, Obama says that African tribes should be viewed as an "ancient loyalties".)
Like imperialists of Old World Europe, the ACP sees their constituents not as free thinking individuals who best know how to go about achieving and creating their own means for success. Instead, the ACP sees his constituents as a flock of ignorant sheep that need to be led -- oftentimes to their own slaughter.
Like the European imperialist who spawned him, the ACP is a destroyer of all forms of democracy.
Here are a few examples of what the British did in order to create (in 1914) what is now called Nigeria and what Obama is doing to you:
1. Convince the people that "clinging" to any aspect of their cultural (tribal) identity or history is bad and regresses the process of "unity". British Imperialists deeply feared people who were loyal to anything other than the state. "Tribalism" made the imperialists have to work harder to get people to just fall in line. Imperialists pitted tribes against each other in order to create chaos that they then blamed on ethnic rivalry. Today many "educated" Nigerians, having believed that their traditions were irrelevant, remain completely ignorant of their ancestry and the history of their own tribes.
2. Confiscate the wealth and resources of the area that you govern by any means necessary in order to redistribute wealth. The British used this tactic to present themselves as empathetic and benevolent leaders who wanted everyone to have a "fair shake". Imperialists are not interested in equality for all. They are interested in controlling all.
3. Convince the masses that your upper-crust university education naturally puts you on an intellectual plane from which to understand everything even when you understand nothing. Imperialists were able to convince the people that their elite university educations allowed them to understand what Africa needed. Many of today's Nigerians-having followed that lead-hold all sorts of degrees and certificates-but what good are they if you can't find a job?
4. Lie to the people and tell them that progress is being made even though things are clearly becoming worse. One thing that the British forgot to mention to their Nigerian constituents was that one day, the resources that were being used to engineer "progress" (which the British had confiscated from the Africans to begin with!) would eventually run out. After WWII, Western Europe could no longer afford to hold on to their African colonies. So all of the counterfeit countries that the Europeans created were then left high-and-dry to fend for themselves. This was the main reason behind the African independence movements of the1950 and 60's. What will a post-Obama America look like?
5. Use every available media outlet to perpetuate the belief that you and your followers are the enlightened ones-and that those who refuse to support you are just barbaric, uncivilized, ignorant curmudgeons. This speaks for itself.
America, don't be fooled. The Igbos were once made up of a confederacy of clans that ascribed to various forms of democratic government. They took their eyes off the ball and before they knew it, the British were upon them. Also, understand this: the African colonial who is given too much political power can only become one thing: a despot.
L.E. Ikenga can be reached at leikenga@gmail.com.
Obama, the African Colonial
By L.E. Ikenga
Had Americans been able to stop obsessing over the color of Barack Obama's skin and instead paid more attention to his cultural identity, maybe he would not be in the White House today. The key to understanding him lies with his identification with his father, and his adoption of a cultural and political mindset rooted in postcolonial Africa.
Like many educated intellectuals in postcolonial Africa, Barack Hussein Obama, Sr. was enraged at the transformation of his native land by its colonial conqueror. But instead of embracing the traditional values of his own tribal cultural past, he embraced an imported Western ideology, Marxism. I call such frustrated and angry modern Africans who embrace various foreign "isms", instead of looking homeward for repair of societies that are broken, African Colonials. They are Africans who serve foreign ideas.
The tropes of America's racial history as a way of understanding all things black are useless in understanding the man who got his dreams from his father, a Kenyan exemplar of the African Colonial.
Before I continue, I need to say this: I am a first generation born West African-American woman whose parents emigrated to the U.S. in the 1970's from the country now called Nigeria. I travel to Nigeria frequently. I see myself as both a proud American and as a proud Igbo (the tribe that we come from -- also sometimes spelled Ibo). Politically, I have always been conservative (though it took this past election for me to commit to this once and for all!); my conservative values come from my Igbo heritage and my place of birth. Of course, none of this qualifies me to say what I am about to -- but at the same time it does.
My friends, despite what CNN and the rest are telling you, Barack Obama is nothing more than an old school African Colonial who is on his way to turning this country into one of the developing nations that you learn about on the National Geographic Channel. Many conservative (East, West, South, North) African-Americans like myself -- those of us who know our history -- have seen this movie before. Here are two main reasons why many Americans allowed Obama to slip through the cracks despite all of his glaring inconsistencies:
First, Obama has been living on American soil for most of his adult life. Therefore, he has been able to masquerade as one who understands and believes in American democratic ideals. But he does not. Barack Obama is intrinsically undemocratic and as his presidency plays out, this will become more obvious. Second, and most importantly, too many Americans know very little about Africa. The one-size-fits-all understanding that many Americans (both black and white) continue to have of Africa might end up bringing dire consequences for this country.
Contrary to the way it continues to be portrayed in mainstream Western culture, Africa is not a continent that can be solely defined by AIDS, ethnic rivalries, poverty and safaris. Africa, like any other continent, has an immense history defined by much diversity and complexity. Africa's long-standing relationship with Europe speaks especially to some of these complexities -- particularly the relationship that has existed between the two continents over the past two centuries. Europe's complete colonization of Africa during the nineteenth century, also known as the Scramble for Africa, produced many unfortunate consequences, the African colonial being one of them.
The African colonial (AC) is a person who by means of their birth or lineage has a direct connection with Africa. However, unlike Africans like me, their worldviews have been largely shaped not by the indigenous beliefs of a specific African tribe but by the ideals of the European imperialism that overwhelmed and dominated Africa during the colonial period. AC's have no real regard for their specific African traditions or histories. AC's use aspects of their African culture as one would use pieces of costume jewelry: things of little or no value that can be thoughtlessly discarded when they become a negative distraction, or used on a whim to decorate oneself in order to seem exotic. (Hint: Obama's Muslim heritage).
On the other hand, AC's strive to be the best at the culture that they inherited from Europe. Throughout the West, they are tops in their professions as lawyers, doctors, engineers, Ivy League professors and business moguls; this is all well and good. It's when they decide to engage us as politicians that things become messy and convoluted.
The African colonial politician (ACP) feigns repulsion towards the hegemonic paradigms of Western civilization. But at the same time, he is completely enamored of the trappings of its aristocracy or elite culture. The ACP blames and caricatures whitey to no end for all that has gone wrong in the world. He convinces the masses that various forms of African socialism are the best way for redressing the problems that European colonialism motivated in Africa. However, as opposed to really being a hard-core African Leftist who actually believes in something, the ACP uses socialist themes as a way to disguise his true ambitions: a complete power grab whereby the "will of the people" becomes completely irrelevant.
Barack Obama is all of the above. The only difference is that he is here playing (colonial) African politics as usual.
In his 1995 memoir, Dreams From My Father -- an eloquent piece of political propaganda -- Obama styles himself as a misunderstood intellectual who is deeply affected by the sufferings of black people, especially in America and Africa. In the book, Obama clearly sees himself as an African, not as a black American. And to prove this, he goes on a quest to understand his Kenyan roots. He is extremely thoughtful of his deceased father's legacy; this provides the main clue for understanding Barack Obama.
Barack Obama Sr. was an African colonial to the core; in his case, the apple did not fall far from the tree. All of the telltale signs of Obama's African colonialist attitudes are on full display in the book -- from his feigned antipathy towards Europeans to his view of African tribal associations as distracting elements that get in the way of "progress". (On p. 308 of Dreams From My Father, Obama says that African tribes should be viewed as an "ancient loyalties".)
Like imperialists of Old World Europe, the ACP sees their constituents not as free thinking individuals who best know how to go about achieving and creating their own means for success. Instead, the ACP sees his constituents as a flock of ignorant sheep that need to be led -- oftentimes to their own slaughter.
Like the European imperialist who spawned him, the ACP is a destroyer of all forms of democracy.
Here are a few examples of what the British did in order to create (in 1914) what is now called Nigeria and what Obama is doing to you:
1. Convince the people that "clinging" to any aspect of their cultural (tribal) identity or history is bad and regresses the process of "unity". British Imperialists deeply feared people who were loyal to anything other than the state. "Tribalism" made the imperialists have to work harder to get people to just fall in line. Imperialists pitted tribes against each other in order to create chaos that they then blamed on ethnic rivalry. Today many "educated" Nigerians, having believed that their traditions were irrelevant, remain completely ignorant of their ancestry and the history of their own tribes.
2. Confiscate the wealth and resources of the area that you govern by any means necessary in order to redistribute wealth. The British used this tactic to present themselves as empathetic and benevolent leaders who wanted everyone to have a "fair shake". Imperialists are not interested in equality for all. They are interested in controlling all.
3. Convince the masses that your upper-crust university education naturally puts you on an intellectual plane from which to understand everything even when you understand nothing. Imperialists were able to convince the people that their elite university educations allowed them to understand what Africa needed. Many of today's Nigerians-having followed that lead-hold all sorts of degrees and certificates-but what good are they if you can't find a job?
4. Lie to the people and tell them that progress is being made even though things are clearly becoming worse. One thing that the British forgot to mention to their Nigerian constituents was that one day, the resources that were being used to engineer "progress" (which the British had confiscated from the Africans to begin with!) would eventually run out. After WWII, Western Europe could no longer afford to hold on to their African colonies. So all of the counterfeit countries that the Europeans created were then left high-and-dry to fend for themselves. This was the main reason behind the African independence movements of the1950 and 60's. What will a post-Obama America look like?
5. Use every available media outlet to perpetuate the belief that you and your followers are the enlightened ones-and that those who refuse to support you are just barbaric, uncivilized, ignorant curmudgeons. This speaks for itself.
America, don't be fooled. The Igbos were once made up of a confederacy of clans that ascribed to various forms of democratic government. They took their eyes off the ball and before they knew it, the British were upon them. Also, understand this: the African colonial who is given too much political power can only become one thing: a despot.
L.E. Ikenga can be reached at leikenga@gmail.com.
Tuesday, May 19, 2009
Soak the Rich, Lose the Rich
Americans know how to use the moving van to escape high taxes.
By ARTHUR LAFFER and STEPHEN MOORE
With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit.
Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."
Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.
And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.
Martin Feldstein, Harvard economist and former president of the National Bureau of Economic Research, co-authored a famous study in 1998 called "Can State Taxes Redistribute Income?" This should be required reading for today's state legislators. It concludes: "Since individuals can avoid unfavorable taxes by migrating to jurisdictions that offer more favorable tax conditions, a relatively unfavorable tax will cause gross wages to adjust. . . . A more progressive tax thus induces firms to hire fewer high skilled employees and to hire more low skilled employees."
More recently, Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found "a significant negative impact of higher marginal tax rates on state economic growth." In other words, soaking the rich doesn't work. To the contrary, middle-class workers end up taking the hit.
Finally, there is the issue of whether high-income people move away from states that have high income-tax rates. Examining IRS tax return data by state, E.J. McMahon, a fiscal expert at the Manhattan Institute, measured the impact of large income-tax rate increases on the rich ($200,000 income or more) in Connecticut, which raised its tax rate in 2003 to 5% from 4.5%; in New Jersey, which raised its rate in 2004 to 8.97% from 6.35%; and in New York, which raised its tax rate in 2003 to 7.7% from 6.85%. Over the period 2002-2005, in each of these states the "soak the rich" tax hike was followed by a significant reduction in the number of rich people paying taxes in these states relative to the national average. Amazingly, these three states ranked 46th, 49th and 50th among all states in the percentage increase in wealthy tax filers in the years after they tried to soak the rich.
This result was all the more remarkable given that these were years when the stock market boomed and Wall Street gains were in the trillions of dollars. Examining data from a 2008 Princeton study on the New Jersey tax hike on the wealthy, we found that there were 4,000 missing half-millionaires in New Jersey after that tax took effect. New Jersey now has one of the largest budget deficits in the nation.
We believe there are three unintended consequences from states raising tax rates on the rich. First, some rich residents sell their homes and leave the state; second, those who stay in the state report less taxable income on their tax returns; and third, some rich people choose not to locate in a high-tax state. Since many rich people also tend to be successful business owners, jobs leave with them or they never arrive in the first place. This is why high income-tax states have such a tough time creating net new jobs for low-income residents and college graduates.
Those who disapprove of tax competition complain that lower state taxes only create a zero-sum competition where states "race to the bottom" and cut services to the poor as taxes fall to zero. They say that tax cutting inevitably means lower quality schools and police protection as lower tax rates mean starvation of public services.
They're wrong, and New Hampshire is our favorite illustration. The Live Free or Die State has no income or sales tax, yet it has high-quality schools and excellent public services. Students in New Hampshire public schools achieve the fourth-highest test scores in the nation -- even though the state spends about $1,000 a year less per resident on state and local government than the average state and, incredibly, $5,000 less per person than New York. And on the other side of the ledger, California in 2007 had the highest-paid classroom teachers in the nation, and yet the Golden State had the second-lowest test scores.
Or consider the fiasco of New Jersey. In the early 1960s, the state had no state income tax and no state sales tax. It was a rapidly growing state attracting people from everywhere and running budget surpluses. Today its income and sales taxes are among the highest in the nation yet it suffers from perpetual deficits and its schools rank among the worst in the nation -- much worse than those in New Hampshire. Most of the massive infusion of tax dollars over the past 40 years has simply enriched the public-employee unions in the Garden State. People are fleeing the state in droves.
One last point: States aren't simply competing with each other. As Texas Gov. Rick Perry recently told us, "Our state is competing with Germany, France, Japan and China for business. We'd better have a pro-growth tax system or those American jobs will be out-sourced." Gov. Perry and Texas have the jobs and prosperity model exactly right. Texas created more new jobs in 2008 than all other 49 states combined. And Texas is the only state other than Georgia and North Dakota that is cutting taxes this year.
The Texas economic model makes a whole lot more sense than the New Jersey model, and we hope the politicians in California, Delaware, Illinois, Minnesota and New York realize this before it's too late.
Mr. Laffer is president of Laffer Associates. Mr. Moore is senior economics writer for the Wall Street Journal. They are co-authors of "Rich States, Poor States" (American Legislative Exchange Council, 2009).
Americans know how to use the moving van to escape high taxes.
By ARTHUR LAFFER and STEPHEN MOORE
With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit.
Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."
Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.
And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.
Martin Feldstein, Harvard economist and former president of the National Bureau of Economic Research, co-authored a famous study in 1998 called "Can State Taxes Redistribute Income?" This should be required reading for today's state legislators. It concludes: "Since individuals can avoid unfavorable taxes by migrating to jurisdictions that offer more favorable tax conditions, a relatively unfavorable tax will cause gross wages to adjust. . . . A more progressive tax thus induces firms to hire fewer high skilled employees and to hire more low skilled employees."
More recently, Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found "a significant negative impact of higher marginal tax rates on state economic growth." In other words, soaking the rich doesn't work. To the contrary, middle-class workers end up taking the hit.
Finally, there is the issue of whether high-income people move away from states that have high income-tax rates. Examining IRS tax return data by state, E.J. McMahon, a fiscal expert at the Manhattan Institute, measured the impact of large income-tax rate increases on the rich ($200,000 income or more) in Connecticut, which raised its tax rate in 2003 to 5% from 4.5%; in New Jersey, which raised its rate in 2004 to 8.97% from 6.35%; and in New York, which raised its tax rate in 2003 to 7.7% from 6.85%. Over the period 2002-2005, in each of these states the "soak the rich" tax hike was followed by a significant reduction in the number of rich people paying taxes in these states relative to the national average. Amazingly, these three states ranked 46th, 49th and 50th among all states in the percentage increase in wealthy tax filers in the years after they tried to soak the rich.
This result was all the more remarkable given that these were years when the stock market boomed and Wall Street gains were in the trillions of dollars. Examining data from a 2008 Princeton study on the New Jersey tax hike on the wealthy, we found that there were 4,000 missing half-millionaires in New Jersey after that tax took effect. New Jersey now has one of the largest budget deficits in the nation.
We believe there are three unintended consequences from states raising tax rates on the rich. First, some rich residents sell their homes and leave the state; second, those who stay in the state report less taxable income on their tax returns; and third, some rich people choose not to locate in a high-tax state. Since many rich people also tend to be successful business owners, jobs leave with them or they never arrive in the first place. This is why high income-tax states have such a tough time creating net new jobs for low-income residents and college graduates.
Those who disapprove of tax competition complain that lower state taxes only create a zero-sum competition where states "race to the bottom" and cut services to the poor as taxes fall to zero. They say that tax cutting inevitably means lower quality schools and police protection as lower tax rates mean starvation of public services.
They're wrong, and New Hampshire is our favorite illustration. The Live Free or Die State has no income or sales tax, yet it has high-quality schools and excellent public services. Students in New Hampshire public schools achieve the fourth-highest test scores in the nation -- even though the state spends about $1,000 a year less per resident on state and local government than the average state and, incredibly, $5,000 less per person than New York. And on the other side of the ledger, California in 2007 had the highest-paid classroom teachers in the nation, and yet the Golden State had the second-lowest test scores.
Or consider the fiasco of New Jersey. In the early 1960s, the state had no state income tax and no state sales tax. It was a rapidly growing state attracting people from everywhere and running budget surpluses. Today its income and sales taxes are among the highest in the nation yet it suffers from perpetual deficits and its schools rank among the worst in the nation -- much worse than those in New Hampshire. Most of the massive infusion of tax dollars over the past 40 years has simply enriched the public-employee unions in the Garden State. People are fleeing the state in droves.
One last point: States aren't simply competing with each other. As Texas Gov. Rick Perry recently told us, "Our state is competing with Germany, France, Japan and China for business. We'd better have a pro-growth tax system or those American jobs will be out-sourced." Gov. Perry and Texas have the jobs and prosperity model exactly right. Texas created more new jobs in 2008 than all other 49 states combined. And Texas is the only state other than Georgia and North Dakota that is cutting taxes this year.
The Texas economic model makes a whole lot more sense than the New Jersey model, and we hope the politicians in California, Delaware, Illinois, Minnesota and New York realize this before it's too late.
Mr. Laffer is president of Laffer Associates. Mr. Moore is senior economics writer for the Wall Street Journal. They are co-authors of "Rich States, Poor States" (American Legislative Exchange Council, 2009).
Monday, May 04, 2009
The Rich Pay More Taxes: Top 20 Percent Pay Record Share of Income Taxes
http://www.heritage.org/Research/Taxes/wm2420.cfm
The Rich Pay More Taxes: Top 20 Percent Pay Record Share of Income Taxes
by Curtis S. Dubay
WebMemo #2420
Since the passage of the 2001 and 2003 tax cuts, critics have claimed incessantly that they disproportionately benefited the rich while burdening the poor. Now that the data is in, these claims have been shown to be unquestionably false.
Squeezing the Wealthy Even More
According to a report issued by the Congressional Budget Office (CBO), the tax cuts significantly increased the share of federal income taxes paid by the highest-earning 20 percent of households compared to their levels in 2000, President Clinton’s final year in office.
In 2006, the latest available year from CBO, the top 20 percent of income earners paid 86.3 percent of all federal income taxes, an all-time high.[1] This is an increase of over 6 percent from 2000, when the top 20 percent paid 81.2 percent. During the same period, the bottom four quintiles all saw their share of the federal income tax burden fall sharply:
* The bottom 20 percent of income earners' share of federal income taxes fell from –1.6 percent in 2000 to –2.8 percent in 2006;
* The next 20 percent's share declined from 1.1 percent to –0.8 percent;
* The middle quintile's share dropped from 5.7 percent to 4.4 percent; and
* The fourth quintile's share decreased from 13.5 percent to 12.9 percent.
Each of these four quintiles' shares was an all-time low.
2001 and 2003 Tax Cuts Removed Low-Income Earners from Roles
The 2001 and 2003 tax cuts removed millions of taxpayers from the federal income tax roles, leaving only those at the top to pay the bill. They lowered every federal income tax rate and created a new 10 percent bracket to further reduce taxes for low-income earners.
While these tax rate cuts lowered taxes for all taxpayers, low-income earners got the biggest cut. In addition to these rate cuts, the 2001 and 2003 tax cuts expanded the refundable Child Tax Credit from $500 per child to $1,000 per child. The combination of lower tax rates and an expanded Child Tax Credit meant many low-income taxpayers no longer paid any federal income taxes.
Was Greater Income the Cause?
Critics counter that the increase in tax shares for high-earners was due to income increases at the top of the income spectrum. But a closer look at the data shows this just is not the case.
The top 20 percent of earners saw their share of pre-tax income rise from 54.8 percent to 55.7 percent, from 2000 to 2006. During that same period, their share of federal income taxes increased from 81.2 percent to 86.3 percent.
The modest increase in incomes is not large enough to explain the large increase in the share of income taxes paid by the top 20 percent. Rather, the removal of substantial numbers of low-income taxpayers from the federal income tax roles is the real culprit.
Refundable Credits Redistribute Income
The bottom 40 percent of income earners actually paid a negative share of federal income taxes in 2006. In other words, these taxpayers are actually paid money through the tax code. This happens through refundable credits like the Child Tax Credit and the Earned Income Tax Credit, which result in "refunds" when they are greater than the taxpayer’s total income tax liability.
For instance, if a family with one child has an income tax liability of $300, it can claim the Child Tax Credit, which wipes out their tax liability, and still receive $700 from the IRS for the remainder of the $1,000 credit. On April 15, not only do the bottom 40 percent of all taxpayers pay no taxes, but they actually receive additional income from the IRS.
Refundable credits redistribute income from the top 20 percent of earners to the remaining tax filers, with the bottom 20 percent the prime beneficiaries. The bottom quintile's share of income, measured after taxes, actually increased a whopping 17 percent compared to its pre-tax levels because of the income they got from refundable credits. Comparing shares of income before taxes are paid to after, only the top quintile saw their share of income decline.
Obama's Tax Policies Widen the Gap
President Obama's tax policies would cause federal income taxes paid by the top 20 percent to increase and the shares of the remaining 80 percent to decrease even further. These policies include those passed as part of the stimulus legislation and those included in the President's Budget Blueprint.
The stimulus created the Making Work Pay Credit[2] and expanded the Child Tax Credit and Earned Income Tax Credit. These refundable credits will knock even more taxpayers from the federal income tax roles and send more money to low-income taxpayers.[3] With fewer low- and middle-income taxpayers paying federal income taxes, the burden will shift even further in the direction of top earners.
President Obama also proposed in his Budget Blueprint to increase income taxes on those making over $250,000 by increasing their tax rates on investment income and reducing the amount they could deduct.[4] This would dramatically increase the share of taxes paid by the top 20 percent while the remaining 80 percent of earners would not pay higher taxes as a result of these proposed tax hikes.
Stop Shifting Burden to Top 20 Percent
To stop the shifting of the tax burden to a dwindling number of taxpayers, Congress should:
* Make the 2001 and 2003 tax cuts permanent for all taxpayers, not just those making under $250,000. This would slow the shifting of the burden to the top 20 percent.
* Stop creating and expanding refundable credits. Welfare spending and subsidies to low-income earners should be done through traditional spending programs, not hidden in the tax code. This would stop a growing portion of the population from being removed from the tax roles.
* Cut top tax rates to return the shares of income taxes paid by each quintile to their more-sustainable 2000 levels.
On Dangerous Ground
The shifting of the tax burden to a small segment of high-income taxpayers is economically dangerous. The beneficiaries of government services are increasingly those who share little or none of the tax burden to pay for them. As they become more numerous, they put more pressure on Congress for more services. Meanwhile, those who bear most of the burden are being squeezed even more, shrinking their number. The result is a growing group of government beneficiaries clamoring for more of a shrinking group’s wealth. Congress should put an end to this practice.
Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
[1]Unless otherwise noted, all data come from Congressional Budget Office, "Historical Effective Federal Tax Rates: 1979 to 2006" April 2009, at http://www.cbo.gov/publications/collections/tax/2009/all_tables.pdf (April 23, 2009).
[2]Curtis S. Dubay, "‘Making Work Pay Credit’ Will Not Stimulate the Economy," Heritage Foundation WebMemo No. 2240, January 26, 2009, at http://www.heritage.org/Research/Taxes/wm2240.cfm.
[3]Curtis S. Dubay, "Obama's Stimulus Has "Spread the Wealth Around’: Are Tax Hikes Next" Heritage Foundation WebMemo No. 2354, March 23, 2009, at http://www.heritage.org/Research/Economy/wm2354.cfm.
[4]U.S. Office of Management and Budget, A New Era of Responsibility: Renewing America's Promise (Washington, D.C.: U.S. Government Printing Office, 2009), p. 123, Table S-6, at http://www.whitehouse.gov/omb/assets
/fy2010_new_era/A_New_Era_of_Responsibility2.pdf (April 23, 2009).
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I think it's great. If there's a silver lining to all the yankees moving south, it's that it turned North Carolina and Florida blue in 2008. The Republicans are in serious trouble in national elect....
