The Party of Income Inequality Is?

The Democratic Party!  For all of its huffing and puffing that it is the party of income equality, the Democratic Party has political control of by far the most areas of the US with high income inequality.  That party likes to claim that the middle class and low wage industry workers have been left behind in income growth over the years.  Let us look at a very interesting graph of the income growth in high wage, middle wage, and low wage industries since 2007:

The high wage industries wage growth over the years from 2007 into 2019 has been relatively steady.  The middle wage industries pay growth had some significant dips in 2010 and 2014 under Obama's administration.  The low wage industry wage growth rate hit lower rates of increase in 2010 and 2012 under Obama.  The Democrats will point out that after that low in 2012, the low wage industry wage growth began to get better until it was about the same rate of growth as that of the high wage industry wage growth rate in 2014.  By 2015, the wage growth rates were pretty close for all three industry groups.  However, in early 2018 wage growth for the low wage industries took off, achieving far faster rates of growth compared to the middle and high wage industry wage growth rates.  Apparently, the economic policies of the Trump administration are quite favorable to wage growth on the part of the low wage industries.

So, just as those areas of the country represented by Republicans in Congress tend to have less income inequality, Republican economic policies under Trump are enabling low wage earners to catch up with higher wage earners while in many of the years under Obama they were falling behind more and more.

Michael Strain of AEI notes that the median wages of all workers increased by 25% over the past 30 years corrected for inflation.  The wages of the poorest paid 20% of workers grew by more than one-third.  The poorest paid workers have actually been catching up in wage income therefore.  Income inequality has decreased.  Applying a broader income measure that takes into account income from fringe benefits, capital gains and dividends, Social Security, Medicaid and Medicare benefits, unemployment insurance, food stamps, and federal tax payments, this reduction of total income inequality remains substantial.  The median household income by this measure increased by 43% from 1990 to 2015.  In comparison, the households in the bottom 20% had an increase in income of 62%.  As the American economy has grown since 1990, the bottom 20% of households on the total income scale have benefited even more than the median household has.

The common claim of the Democrat Party that the poor and the middle class are falling behind and somehow suffering does not hold up.  It is true that they could have benefited more had government policies been different.  The economy overall could have grown more rapidly with policies more friendly to the free, voluntary private sector.  Had that extra growth path been chosen, median and poorer households would have had greater increases in income.  We see evidence of how that would have been the case in the recent surge in income of the low wage industries under the Trump administration with its decreased cost of regulations, its signalling of fewer arbitrary and expensive future regulations, and its tax cuts favoring business investments to increase business productivity.  The Obama regulatory chaos and extreme uncertainty with a will to wipe out entire industries extended the Great Recession period of slow economic growth, much like Franklin D. Roosevelt's capricious federal management of the economy that greatly prolonged the Great Depression and the later uncertainty caused by LBJ, Nixon, and Carter offer lessons in how to slow economic growth and with it to deny most of us the benefits of an improved standard of living relative to what the Democrats will generally allow us.

The free markets of a Capitalist society unleashed would benefit most Americans greatly and that would most definitely include most low wage Americans!

Leaving High Taxes and Big Government Behind

This post is based on some very useful references provided in a comment to my prior post on the Cato Institute evaluation of the freedom in the 50 States 2016.

Between 1992 and 2014, the IRS tracked the migration of people and their AGI on their tax forms. The net results of these migrations are indicated in this map where red is a loss of income due to net migration and green is an income gain.

It is interesting to note that of the 8 least free states by the 2016 report of Cato Institute on Freedom in the 50 States of my last post, the following 7 states are either red or light red in this income migration map, indicating a loss of income:

New York
California
New Jersey
Maryland
Connecticut
Illinois
Rhode Island

Out migration from California tends to be strong to Arizona, Nevada, Washington, and Oregon.  All of these states are more free than California and the least free is Oregon, which perhaps explains why its income increased the least of these four states.

New Hampshire, the freest state, had a small increase in income due to migration. Oklahoma and Alaska were #3 and #2, respectively, and both have risen in recent years in freedom, so their newly deserved reputations were not yet established in many of the years 1992 - 2014.  Indiana at #4 has been more stable in its freedom and clearly has performed much better in minimizing losses than its neighboring states of Illinois, Michigan, and Ohio in this time period.  Indiana's weakest ranking of #26 was in fiscal policy which includes taxes and that is a particularly strong factor on the out-migration of income.  Tennessee, Idaho, Florida, and Arizona of the 10 most free states are also all green in this income migration map above.  #5 South Dakota is white, or income neutral, and #9 Iowa is pink.

Overall, the freer states were the Rocky Mountain states, the Great Plain states from Oklahoma north, and the Southeast with the exception of Mississippi, Louisiana, and Arkansas.  There are no red states in these areas.  Nebraska, Iowa, Missouri, and Kansas are pink, but three of these states are in the #16 - #25 grouping for freedom.  Missouri is further hurt by not being a Right to Work state.

Here is another interesting map from Peter J. Nelson of the Center of the American Experiment entitled Minnesotans on the Move to Lower Tax States 2016:

In the map, the bluer the color the greater the loss of taxpayers earning more than $200K a year.  We also find that most of the low freedom states have higher losses than do high freedom states.  All of the 9 states with gains equal or greater than 1.00% are in the top twenty most free states by the Cato Institute ranking.  Tax policy is under the Fiscal Policy ranking and in this area South Carolina is ranked #23, Nevada is #25, and Wyoming is #21, so there is a stronger correlation with the overall freedom ranking than there is with the Fiscal Policy ranking subset of freedoms for these high income in-migration states.  Some of these high in-flux states do have very high Fiscal Policy rankings, however, with New Hampshire, Tennessee, Florida, Montana, and Idaho having Fiscal Policy rankings from #1 to #8.  So general freedom may be more important for a subset of the wealthier migrators and tax policy alone may be the most important factor for another subset of these wealthier migrators.

Overall, I would judge it likely that income migration is affected strongly by tax policy, but it is also affected strongly by a desire for freedom in general.  Different people have different weightings on these aspects of freedom in their personal set of values.  Good government seeks to provide everyone with the freedoms their individual rights entitle them to.  When a state government offers a better service to freedom, rational and productive people will come to that state. Good things happen to states and the local communities when more rational and productive people choose to live there.

A Fallacious Liberal Claim of Income Stagnation

Democrats like to make the claim that median U.S. worker income has been almost stagnant since 1980.  This is said to show that trickle-down, supply-side, or self-responsibility economics does not work for the median worker.  Only the rich benefit, they say.  Let us examine this claim.

It is true that between 1980 and 2005 the median worker income minus benefits increased a mere $700 from $25,000 in 1980.  This ignores the fact that benefits grew at a much faster rate than did worker compensation in the form of direct income.  It also ignores the fact that many more workers with incomes above the median are making much more money now than they were in 1980.  Average income went up much more than did median income.  In 1980, only 23% of all jobs were considered high paying professional jobs, while more than half of all new jobs since 1980 are high paying professional jobs.  If this were to continue into the future, more than half of all jobs in existence will become high paying professional jobs and the median income will climb sharply.  But as yet, the median job is not a high paying professional job.  But we should note that the stagnation in median income is not due to most new jobs being burger flipping.

There is further news indicating that the median income figures for all workers are hiding the important truth.  It turns out that both white men and white women in the workforce have had much higher income gains since 1980 than the reported all worker gain of 3%.  White men have gained in income by 15% and white women have gained by 75%!  Does this mean that non-white workers have lost income since 1980?  No, not at all.  Nonwhite men gained 16% in income.  Nonwhite women gained 62% in income.  Every one of the individual categories gained many times more than 3% in income since 1980!  The reason the median income for all workers barely increased was because the workforce came to be increasingly composed of nonwhites and white women whose median group incomes were below the median income of all workers in 1980.  Changing demographics is the explanation for the nearly stagnant median income minus benefit result.

The median income for white men rose from $30,700 to $35,200, moving most of their income distribution curve well above the total worker distribution curve median.  Nonwhite men increased their income from $19,300  to $22,300.  White women raised their incomes from $11,200 to $19,600, while nonwhite women raised theirs from $10,200 to $16,500.  Because the fraction of the population which is nonwhite is growing, part of the reason for their lower incomes is because the nonwhite men and women have lower median ages and therefore less job experience.  Younger people with less job experience generally earn less.

The fact that the median income of all workers has been essentially stagnant between 1980 and 2005 is not an indictment of supply-side economics or Reaganomics as the Democrats love to claim.  This is a result of the very large increase in the fraction of nonwhite workers in that period who have long had lower incomes than white males.  This rapidly growing nonwhite worker fraction also has a lower median age and therefore has less job experience.  The employed Hispanic population was the primary growth fraction of the employed in 2005 compared to 1980.  The fraction of white workers decreased by more than 6%, while the fraction of black workers went up about 7%.  The fraction of Hispanics increased by a factor of 2.43!

Between 1980 and 1990, the labor force participation rate for women grew rapidly before plateauing from then until 2005.  The labor force participation rate of men fell slightly from 1980 to 2005.  This also caused the fraction of workers in a lower earning group to increase.

Supply-side economics or Reaganomics was advanced as a method to raise all boats.  It performed as advertised, despite being applied in only a modest and half-hearted manner.  White female worker and nonwhite female worker income advanced sharply, 75% and 62%, respectively.  White male and nonwhite male incomes advanced less dramatically, but they still increased 15% and 16%, respectively, from 1980 to 2005.  We should all be reasonably happy with these results in the face of a rapidly changing demographics.

Contrasting State Cross Border Business Health Compared to a Freedom Index

A recent discussion I was in with other alumni of Case Western Reserve University about the sorry state of Cleveland, which was just recently chosen by Forbes Magazine as the most miserable city in America, caused me to consider some of the effects on Cleveland of being in a state with a bad business climate.  Of course, the city of Cleveland does much to cause its own problems and can be said very reasonably to have a bad influence on the politics of the whole state of Ohio.  This case also caused me to think about the strange underdevelopment of southern New Jersey.  Then today, I read an article on the strong business performance of Northern Virginia compared to Washington, D.C. and the Maryland suburbs of Washington, D.C.  What explains these differences?

There are major differences in the ability to do business based on regional factors such as location, geography, population density, transportation, and other factors besides political factors.  This makes it hard to fully compare doing business in South Dakota with doing it in New Jersey or Maryland.  But, if one is a business owner or prospective owner, there is often a fair equivalency in many of these other factors if you are deciding whether to establish your business in Northern Virginia or in the Maryland suburbs of Washington, D.C.  Similarly, it is very reasonable to consider putting your business in southeast Pennsylvania, Delaware, or Southern New Jersey.  Once again, one can choose Ohio, or one of Michigan, Indiana, Kentucky, or Pennsylvania for many types of businesses.  Specifically, if one is considering the Cleveland, Ohio area, it is easy also to consider Pennsylvania.

I want to explore how far political freedom can be correlated with these remarkable differences in economic and business performance.  William P. Ruger and Jason Sorens have published Freedom in the 50 States: An Index of Personal and Economic Freedom through the Mercatus Center of George Mason University, dated February 2009, which I previously discussed in a post here.  They rated and ranked the states for economic freedom and then again for personal freedom and provide an overall freedom ranking.  They correlate the degree of freedom with rates of internal net migration.  People, at least those willing to move, find freedom attractive.  Economic growth rates may also be suspected to be dependent upon economic freedom, and at least secondarily upon personal freedom as well.  Start-up companies commonly need to be able to attract bright, hardworking professionals.  It is reasonable to expect that many of them value personal freedom.

Consider the issue of the growth of Northern Virginia versus the Washington suburbs of Maryland.  In 1970, Northern Virginia accounted for 27.0% of the Gross Regional Product, with Suburban Maryland having a 34.5% share, and D.C. a 37.5% share.  In 2009, D.C.'s share had shrunk drastically to 22%, while Suburban Maryland had shrunk slightly to 32%.  Northern Virginia rose startlingly to 46% of the Gross Regional Product.  In absolute terms, all three sub-regions grew their gross product, but clearly the rate of growth in Northern Virginia greatly outstripped that of the Suburban Maryland and D.C. areas.

How did Virginia compare to Maryland in the freedom indices?  Virginia was ranked 13th on the Economic Freedom Index, while Maryland was ranked 34.  Virginia was ranked number 9 on the personal freedom index, while Maryland was ranked 50th.  For overall freedom, Virginia was ranked number 9 and Maryland was ranked number 46.  While other factors can be critical in starting a new business, many businesses will have a fairly balanced choice between Virginia and Maryland for other reasons and will then choose more economic and personal freedom.  D.C. is not ranked, but it is almost certainly worse than Maryland for freedom, so its more greatly fallen share of the Gross Regional Product is surely to be expected.  These freedoms are not just luxuries being chosen.  In many cases, they are the difference between business success and failure.

I have a friend who lives in Southern New Jersey and he has told me many stories of the poverty there, the miserable schools, and the very high local unemployment rates.  This was true prior to the recession.  Of course such a situation can make an area already look unattractive to a business.  But, there is plenty of relatively undeveloped land in Southern New Jersey and locations close to Philadelphia and densely populated Delaware areas.  It is also in the middle of the mid-Atlantic area.  Why is this area so highly undeveloped when Northern New Jersey has a high degree of development?

Well, if we look at Northern New Jersey and compare freedom there to that in New York, we find that New Jersey does relatively well, because New York is miserable.  On the Economic Freedom Index, New Jersey is 46, while New York is 50.  Both are awful, but New Jersey is at least competitive and even better.  On the Personal Freedom Index, New Jersey rates a 45 ranking, while New York is 48.  On the Overall Freedom Index New Jersey is 49 and New York is 50.  So Northern New Jersey can compete for businesses with New York.

But, Southern New Jersey has to compete with Pennsylvania and Delaware for businesses.  One has to expect that the fact that health insurance, as mandated by the respective states, being twice as expensive in New Jersey compared to Pennsylvania, for instance, might have some impact on how businesses will fare in the respective areas.  The Economic Freedom Index takes into account many other factors as well.  Comparing New Jersey to Pennsylvania and Delaware, we find that PA is 19, DE is 24, and NJ is a lowly 46.  On the Personal Freedom Index, PA is 29, DE is 36, and NJ is 45.  The Overall Freedom Index says PA is 20, DE is 26, and again we have our lowly NJ at 49.  The inducement here is clearly to choose Pennsylvania for your new business, or maybe Delaware.  But, Southern New Jersey looks like a hard choice to justify.

Cleveland is not quite so strongly affected by conditions in a state which is really close to it.  But still, many businesses might reasonably say that they have reason to be in the Eastern Mid-West and then choose a state to be in.  This will affect Cleveland.  Of these states, the nearest is Pennsylvania.  But, Michigan, Indiana, Kentucky, and West Virginia also border Ohio.  Let me list the states, their Economic Freedom Index ranking, their Personal Freedom Index ranking, and their Overall Freedom Index ranking:

PA, 19, 29, 20
WV, 40, 17, 33
KY, 33, 26, 32
IN, 16, 19, 13
MI, 15, 20, 14
OH, 32, 46, 38

On Overall Freedom, Ohio is dead last in its local region.  It is particularly poor with respect to Indiana, Michigan, and Pennsylvania.  It is hardly a wonder that Ohio is having a hard time economically.  This, in turn, hurts Cleveland.  To be sure, the fact that it is very hard to start a business in Cleveland is an outstanding reason for it to be a basket case.  John Stossel recently pointed out that a Cleveland official recently boasted that they helped a company set up a business in Cleveland in a mere 18 months.  In comparison, a company was started in Houston in one day.  Cleveland has 22 zoning categories, while Houston has none.  Cleveland has a penchant for electing kooks as mayor.  Dennis Kucinich was one of the worst.  Dennis the Menace is blatantly opposed to the profit motive.  He is now in the House of Representatives and for a long while opposed ObamaCare because it was not a single-payer program.  He caved after a ride with Obama in Air Force One.  [Did Obama threaten to throw him out the door at altitude?  Dennis should have held true to his convictions.]

The Progressives view freedom as the archaic and quaint coin to be paid for the aid of the needy.  Or so they say.  They do have an uncanny penchant for making the politically-connected wealthy much more wealthy and even those who are only politically connected wealthy.  But, history tells us that man's condition was little improved for eons until capitalism and the free market system began its rapid development in the 1800s.  Comparative studies today of the countries around the world show huge advantages in overall prosperity and the prosperity of the poor in nations for those nations with higher degrees of freedom.  The little study above also shows that there is some considerable reason to believe that even the differences between adjacent states in the United States are very important for the economic development of states and regions in those states.

Trading freedom for redistributionist schemes is a fool's errand.  The average wealth and income will fall, as will the median wealth and income, as will the wealth and income of the poor.  No one wins, except those who are consumed by envy and must level everyone to poverty to slake the thirst of that lowly envy.  Frankly, every state should be in a keen competition with the states near it to provide its citizens with more freedom than those neighboring states do.  Of course, the politicians would hate to see such a competition be widely recognized as important by the People.  They do everything they can to avoid letting us know about this, including insisting that the government-run schools not teach students about this source of American Exceptionalism.  We are prosperous because we are free.  As we lose our freedom, we will lose our prosperity.

The Effect of the Wrongheaded Obama Tax Increase

Chris Edwards, the Cato Institute Director of Tax Policy Studies, testified before the Senate Committee on Finance on 23 February 2010 on the effects of the proposed Obama tax policy of increasing the top two personal income tax brackets.  Key background facts are:

• The top two personal income tax marginal tax rates are now 35% and 33%.
• The Tax Reform Act of 1986 had reduced the tax rates to either 15% or 28%, but these were increased in the 1990s with a 1993 increase in the top rate to 39.6% and only partially rolled back in the 2000s to the current rate structure.
• More than half of all business income in the United States is reported on individual returns.
• About one-quarter of all individual tax filers earning more than 50% of their income from a business fall into the top two marginal tax rate brackets.  This is about 600,000 businessmen.
• The average of the highest marginal tax rates (combined to include local taxes) of the 30 countries of the OECD has fallen and now matches that of the U.S.
• One-quarter of all U.S. technology companies started in the last 10 years had an immigrant founder.

The consequences of the proposed Obama high tax bracket tax rate increases are:

• Reported income of affected tax payers will fall by 3%.  This wipes out about 40% of the expected tax revenue gain if one ignores behavior changes due to the higher rates.
• The 1993 increase in the top rate to 39.6%, reduced the number of upper middle income households starting a business by as much as 20%.
• A Small Business Administration study found that a 1% decrease in the marginal tax rate would increase entrepreneurial activity by 1.42% for single filers and by 2.0% for married filers.
• Businessmen affected by the highest marginal tax rate will reduce hiring by about 8.5%.
• Business income in those businesses affected by the highest marginal tax rate will drop by 5.7%.
• Capital expenditures of the businesses affected by the highest new tax rate will drop by 9.2%.
• U. S. businesses will find it harder to compete in the global marketplace with the highest corporate tax rate (shared with Japan) and one of the higher highest marginal tax rates.
• Fewer high-skill and highly motivated immigrants will come to the U.S.
• The quarter of high technology businesses founded by immigrants will decrease to a smaller fraction.

The net effect of these dynamic responses of real businessmen to being soaked by the Obama government will be lower, not higher, tax revenues in just a few years time.  The only reason to increase these taxes is for a very short term increase in tax revenues and as an example of class warfare.  If equality is more important than everyone's actual well-being, then this is a viable policy.  But, it is not a viable and rational policy if you aim to

• Allow everyone to have higher incomes, though they will not be equal incomes.
• Increase government tax revenues in the longer haul to be better able to cope with the huge unfunded Medicare, Medicaid, and Social Security liabilities as the Baby Boomers retire.
• Encourage people to work longer (past minimal retirement ages) and harder so they will pay more Medicare and Social Security and income tax money and draw less Social Security money from the government.
• Fire up the jobs creation engine that produced many more jobs in the 1990s when the highest marginal tax rates were lower than the 2000s have produced with already higher marginal tax rates.
• Increase U.S. exports.
• Create as many high technology, high-value added businesses as possible with high paying jobs.

As usual, Obama is just as wrongheaded as he can be.  He is either so ignorant of basic economics that he follows insane tax policies, or he values income equality so highly he is happy to see Americans with many fewer jobs and lower incomes, if only the end result is more income equality.  In other words, he must either be ridiculously ignorant or saturated with hateful envy.

The Worst Economic Decade Since the Great Depression

First, let us consider the record for Gross Domestic Product or GDP increases by decade since the 1930s, as given in an article in The Economist, 27 February - 5 March 2010.  The data in each graph to follow will be the average annual growth rate for the decade:

GDP grew by a shade less than 1% in the 1930s, but then it grew rapidly in the 1940s at about an average 5.5% a year.  The growth rate for the 1940s may be a strange animal, given WWII.  The 1950s and 1960s were great years of growth, exceeding 4%.  The 1970s, 1980s, and 1990s were all about the same at 3% or a bit more.  Finally, we come to this last decade, the 2000s, and we managed only a 1.9% increase over the 10 years in GDP.  Why?  Let us look at some further figures to see if they might cast some light on the reason.

Here are the figures on Consumption and Income:

Of course the 1930s being dominated by the Great Depression, both consumption and income increases were very small.  The consumption increases were higher than that of income, as people used up savings to scrape by in the Great Depression.  Income was suppressed further by large tax increases during the Great Depression, not to mention the many anti-business acts of the Progressives Hoover and Roosevelt.  Among other foolish policies, they both tried to push industry to keep wages high, which led to industry employing many fewer people than they otherwise would have.  This in turn suppressed overall income growth and consumption.  In the 1940s, 1950s, and 1960s, consumption growth averaged about 4%.  In each of these decades, income growth averaged annual rates in the range of 4.3 to 4.5%.  Income growth in each decade was a bit higher than consumption growth.  In the next period of the 1970s, 1980s, and 1990s, the growth in consumption was somewhat greater than that in incomes.  Consumption grew between 3.2 and 3.5% a decade, while income growth was about 3% each decade.  Then come the 2000s and the growth in consumption is 2.5%, but the growth in income is a measly 1.5%!  Consumption was a full 1% greater than income.  No decade from 1930 could match such a large discrepancy between income and consumption.  In the 1940s and 1950s, income exceeded consumption by about 0.5%, but prior to the last decade, the worst case of consumption exceeding debt was the 0.4% of the 1930s.  Debt piled up very high in the 2000s.

Another important economic metric is the change in non-farm payroll employment, called non-farm payroll.  This is the number of jobs in construction and manufacturing or the goods-producing industries.

The average annual increase in non-farm payroll jobs in the 1940s - 1970s was between about 24% and 38%.  We managed only 20% increases in the 1980s and 1990s.  This last decade was abysmal, with an actual loss of goods-producing non-farm jobs.  Heavy government regulations and mandates coupled with our sharing the honors with Japan for the highest corporate income tax rates in the world in a global economy helped mightily to bring this situation about.

The reason the decade of the 2000s has been so unproductive is primarily the growth of federal, state, and local governments and their many strangling regulations and mandates.  Just as the Great Depression was a period of very little GDP growth and one of consumption exceeding income greatly, so has been the 2000s.  The Great Depression was a period of huge growth in the cost of government and of government regulations and mandates.  So has the decade of the 2000s been such a period.  This problem was already very apparent back in July 2008, when I wrote this from this blog post.

Americans for Tax Reform calculates the cost of government based on what they spend and on the cost of regulations. They calculated that 16 July was the day the average American stopped working for the governments. This was 4 days later than last year! Individuals worked 83.7 days this year for the federal government and 50.5 days for state and local governments. Government regulation costs each of us 62.6 days this year! If we nationalize health care or add a cap and trade bill to combat the mythical man-made global warming, these costs will go up dramatically. They are going to go up dramatically in any case because Baby Boomers are about to start retiring in large numbers, which will at once remove many high income earners from higher tax brackets and increase Social Security and Medicare costs.

Federal spending is up 11.4% more than the size of the economy since 2000. So despite the economy growing well over that period and federal taxes rising even faster than the economy did, Congress spent more money than the bonanza they were given in increased tax revenues. If the rate of government spending had been held to the rate of the growth of the economy, the federal deficit would have disappeared in 2006.

Regulation costs this year are 17.2% of the national income. These regulations hurt the economy and its growth in ways whose costs are not included in that figure. Reductions in output, jobs, lower wages, and slowed economic growth are estimated to cost as much as another $1.5 trillion per year.

State and local government expenditures have increased by 19.1% more than the national income since 1999. In Connecticut, the people will work until 31 July before they come even with the cost of government, while in New Jersey the date was 30 July, and in New York it was 29 July.

Since that time, Obama and the Democrat-controlled House and Senate have made huge transfers of wealth from the productive private sector to the mischief-causing and boondoggling public sector.  The situation is worsening and doing so very rapidly.  Throughout this last decade, the manipulations of the markets by the government have pushed the People more and more into more spending and consumption than their incomes can sustain.  More and more, the People are finding that they cannot both satisfy the heavy demands of government and make real profits.  If they are productive and make good money, the Democrats plan to tax nearly all the producers produce away to fund their visions of socialist government and socialist entitlements.  The Democrats have added the burdens of supporting the banking, auto, alternative energy, electric power grid, and investment industries to the backs of the American People.  They want to add many more health care and energy costs onto their wearily bent backs.  They want to transfer more of the management of American companies to labor union leaders.  It is the private sector that drives home the possibility of increased income for Americans, not the public sector.  The public sector only adds costs, once it surpasses its legitimate functions of defense of the nation, police protection, and the enforcement of contracts.  When the federal government exceeds its constitutional powers, as three-quarters of its spending surely does, it becomes a powerful engine carrying the whole nation ever deeper into the muck of a dismal swamp.

The dismal GDP and income results of the first decade of the 2000s was not just a matter of bad luck.  No, we achieved all this by design.  It took a lot of effort by our government office holders to ignore the costs of what they have promoted.  As the Baby Boomers retire and go on Medicare in huge numbers in the next few years, the drain of the public sector spending on the productive private sector is going to skyrocket.  Drastic cutbacks in all levels of government are direly needed.  Yet, we hear only of plans for further expansion of these governments from our current office holders.  This is ridiculously irresponsible.  We must not only turn these buffoons out of office in massive numbers, but we must eliminate many of their positions and replace those needed with people with a very much greater respect for the productive private sector.  We need office holders who are satisfied to be the servants of the People, rather than their arrogant rulers. We should also hunt down those most responsible for the many fraudulent claims that various government programs would cost much less than they did and provide much greater benefits than they did and prosecute them for fraud. 

Or, we could simply have a great Tea Party and Tar and Feather the worst offenders of our Constitution and run them out of town on a rail.  There ought to be a real payback for those who commit treason, which is what an office holder does when he purposely ignores his oath to protect, preserve, and defend the Constitution of the United States of America.  We the People, must make it clear that it is no longer acceptable for a public office holder to ignore the Constitution and its severe limits on his power to rule.  After all, the Constitution is a very simple document compared to the hundreds of thousands of pages of federal laws alone which we the People are expected to obey or face heavy fines or imprisonment.  We are told that ignorance of the hundreds of thousands of pages of federal law is no defense.  Well then, payback is due and We the People should be adamant that all public office holders are expected to comply with the limitations on their power of the Constitution and ignorance of the Supreme Law of the Land is no defense!

Egalitarianism vs. Flourishing

One of the great differences between socialism and capitalism is based on the relative values that the socialist and the capitalist put on egalitarianism and flourishing. The socialist is greatly offended by differences in income and wealth among people. He would rather have a system in which the lower quintile in income of workers had, say, $15,000 income per year and the upper quintile had $25,000 per year income, than one in which the lower quintile of workers had an income of $25,000 per year and the upper quintile of workers had an income of $80,000 per year. In his preferred system the upper quintile makes only $10,000 per year more income and it is only two-thirds greater. In the latter case, the difference in income is $55,000 per year and the the upper quintile is making 3.2 times as much per year. The capitalist is very happy with this case with the greater divergence of income. Why?

The result of the capitalist system proposed here has an upper quintile making 3.2 times as much as they would make in the socialists preferred system. This group is certainly better off. The lower income quintile in the capitalist system is making 1.67 times as much as in the socialist system. Of course, the capitalist system has not rewarded the lower quintile as richly as it did the upper quintile, but it sure did make them 1.67 times better off than did the socialist system.

Yet, many, many people prefer the above socialist system outcome to the capitalist system outcome. Why? One can only see this as the result of an overweening envy and/or an equally overweening guilt at being successful in generating income. Both seem to apply in various combinations to socialists. But these same socialists almost always pretend to actually care about whether the lower quintile will flourish in their system. It is some very twisted notion of caring in which you would condemn the poorest quintile to only 60% of the income they might readily have in the capitalist system. Rather than see the lowest quintile in income actually have more means to buy homes or rent decent apartments, have a car of their own, eat well, be able to reasonably entertain themselves, educate themselves, and wear decent clothes, the socialist wishes to indulge his feelings of envy and guilt. Rather than respect the wealthier quintile for its ability to produce goods and services in high demand by others, they choose to hate them. When they are of that highest group, it is often guilt which motivates them to despise the capitalist system and to hate themselves.

The capitalist proponent seeks the means to allow each individual to maximize his own interest without the use of force, but only by means of arranging free trades for values of mutual interest to the trading parties. This allows each individual to decide for himself what he wants and how he wants to go about attaining it. In this system, it has been shown that men are quite effective in acquiring the values they have chosen. In the socialist system, a huge fraction of the people must be thwarted in their pursuit of their values, so that the differences in the degree to which men achieve those values are minimized. This is a very achievable goal, but it always comes with a very high price tag.

The capitalist system does not just allow some people to maximize the amount of money they make. It allows them and it encourages them to maximize their use of energy and their use of their minds. It allows men to be creative and to offer others the products of their creativity. When Henry Ford built the inexpensive Model T, he not only made himself rich, but he made cars that very many people could afford available to them. He was also able to pay his factory workers unheard of high wages. Who was hurt by the great wealth that Ford acquired? Neither the new car owners nor his factory workers were hurt in the least. In fact, they clearly benefited greatly.

With many desirable products being produced by men becoming wealthy in the process, the population has a rich choice of goods to buy. They buy those that they think will make their lives better and richer. The employees who make the various products also have many choices as to where they will work, for whom they will work, and what kind of work they will do. They can go to the factory with the best pay, which will tend to be the one with the greatest need for workers or the one which can put them to the most productive use. They may wish to stay in a given area of the country where they have family and the more factories there to choose from, the better off they are likely to be in choosing work they like or in negotiating for pay. When the socialist is allowed to put roadblocks in the way of the entrepreneur who is becoming wealthy, they hurt everyone. They hurt those who use or would use the products and services of the in-demand entrepreneur and they hurt the employees of the entrepreneur. They also hurt the stockholders and investors, which even in today's mixed economy is more than half of all workers.

All of this is inescapable and it is also a very obvious truth. Yet, in the name of envy and guilt, many people turn a blind eye to this knowledge. Envy and guilt create blindness and it is most debilitating. It is grotesque when this denial of reality and rejection of the good for almost everyone becomes the justification for the brutal use of force to keep men from making voluntary trades in their mutual interest.

Obama Attacks Selfishness Again and Again

This guy is really committed to attacking people for being selfish. He attacks them if they use their own mind and work long, hard hours to create income and wealth by providing goods and services that other people want and voluntarily trade for. Frankly, to do so is to attack the mind and body of every individual human being. He believes it is perfectly righteous to threaten each of us with brutal force to deprive us of the value of the hours of our lives and to dictate to us what our values will be, or else, he will soon be able to send hordes of government-hired goons to forcefully take our property and take our income. All in the name of his supposition that if we do not allow this to happen, we are the damned selfish.

Well, I am selfish and proud that I am worthy of living a fine life. I am competent and fully able to manage my own life, while directing the thought and action needed to identify my values and to achieve them. I am proudly selfish and have a sovereign right to live for my values, not Obama's values and not for some amorphous goo of the values of those who voted for him. We have a choice: to be selfish or to be slaves.