Wednesday, October 17, 2012
Townhall.com ^ | October 17, 2012 | Walter E. Williams
Posted on Wednesday, October 17, 2012 8:22:40 AM by Kaslin
Here's a recent statement frequently suggested by leftist academics, think tank researchers and policymakers: "People were not just struggling because of their personal deficiencies. There were structural factors at play. People weren't poor because they made bad decisions. They were poor because our society creates poverty." Who made that statement and where it was made is not important at all, but its corrosive effects on the minds of black people, particularly black youths, are devastating.
There's nothing intellectually challenging or unusual about poverty. For most of mankind's existence, his most optimistic scenario was to be able to eke out enough to subsist for another day. Poverty has been mankind's standard fare and remains so for most of mankind. What is unusual and challenging to explain is affluence -- namely, how a tiny percentage of people, mostly in the West, for only a tiny part of mankind's existence, managed to escape the fate that befell their fellow men.
To say that "our society creates poverty" is breathtakingly ignorant. In 1776, the U.S. was among the world's poorest nations. In less than two centuries, we became the world's richest nation by a long shot. Americans who today are deemed poor by Census Bureau definitions have more material goods than middle-class people as recently as 60 years ago. Dr. Robert Rector and Rachel Sheffield give us insights in "Understanding Poverty in the United States: Surprising Facts About America's Poor" (9/13/2011). Eighty percent of poor households have air conditioning. Nearly three-fourths have a car or truck, and 31 percent have two or more. Two-thirds have cable or satellite TV. Half have one or more computers. Forty-two percent own their homes. The average poor American has more living space than the typical non-poor person in Sweden, France or the U.K. Ninety-six percent of poor parents stated that their children were never hungry during the year because they couldn't afford food. How do these facts square with the statement that "our society creates poverty"? To the contrary, our society has done the best with poverty.
Maybe the professor who made the statements about poverty -- who, by the way, is black -- was thinking that it's black people who have been made poor by society. One cannot avoid the fact that average black income today is many multiples of what it was at emancipation, in 1900, in 1940 and in 1960, even though average black income is only 65 percent of white income. There is no comparison between black standard of living today and that in earlier periods. Again, the statement that "our society creates poverty" is just plain nonsense.
What about the assertion that "people weren't poor because they made bad decisions"?
The poverty rate among blacks is 36 percent. Most black poverty is found in female-headed households, but the poverty rate among black married couples has been in single digits since 1994 and stands today at 7 percent. Today's black illegitimacy rate is 72 percent, but in the 1940s, it hovered around 14 percent. Less than 50 percent of black students graduate from high school, and most of those who do graduate have a level of academic proficiency far below that of their white counterparts. Black men make up almost 40 percent of the prison population.
Here are my several two-part questions: Is having babies without the benefit of marriage a bad decision, and is doing so likely to affect income? Are dropping out of school and participating in criminal activity bad decisions, and are they likely to have an effect on income? Finally, do people have free will and the capacity to make decisions, or is their behavior a result of instincts over which they have no control? As a black person, I'm glad that the message taught to so many of today's black youths wasn't taught back in the 1930s, '40s and '50s, when the civil rights struggle was getting into gear. The admonishment that I frequently heard from black adults was, "Be a credit to your race."
Monday, October 15, 2012
By William Sullivan
There is a reason that Obama's ideological policy efforts have failed America. It is because they, like his ideology, are not American.
No, I am not suggesting that he wasn't born here or that he's not an American citizen. I am stating with absolute certainty that his core ideology is predicated upon anything but liberty. And since liberty is at the very core of American ideology, he is thoroughly un-American.
Obama's vision for America is based upon equality, not liberty. And despite the apparent confusion that many Americans seem to have, these two principles do not represent the same thing. But don't take my word for it. Milton Friedman, the brilliant economist and advisor to Ronald Reagan, has clarified the distinction between equality and liberty in the clearest of terms, and it doesn't take a political mind to grasp it. It just takes a mind willing to accept reality.
While fielding questions before an audience at Stanford University on February 9th, 1978, Friedman was challenged by a young man in the audience about America's responsibility to the poor.
The young man began:
You say that many people in America agree with your kind of freedom, a freedom from coercion, and I might agree with you. But I also believe that many people in America believe in a different kind of freedom, and that is freedom to well-being. A certain level of standards for housing at a good price, education, et cetera. Also, I want to say that the state has built into it a system, uh, ah, that the poor remain poor and the rich remain rich. And that is an externality of the system.
Another way of putting this is to say that he believes that income inequality is a serious problem that is only getting worse because of systemic flaws that cause the rich to get richer and the poor to get poorer, which is precisely how Obama frames the issue. So Friedman's response to this suggestion applies equally:
It is not built into the system at all. It has never been true. It is simply false. If you look at the evidence, there's an enormous amount of mobility from one class to the other. In fact there used to be a saying "Three generations from shirtsleeves to shirtsleeves," which reflected exactly the opposite effect. It is not built into the system. On the contrary, there is a great deal of mobility within generations and between generations. So we shouldn't argue on the basis of false factual premises.
Oh, if only we didn't have to argue on the basis of false premises, we could be free of this myth once and for all. The plain and simple fact is that the vast majority of Americans generally do not remain in either the "poor" income class or the "rich." As Friedman's contemporary Thomas Sowell points out, "Comparing the top income bracket to the bottom income bracket for a period of years tells you nothing about what is happening to the actual flesh and blood human beings who are moving between brackets during those years."
Fluidity between income classes is not only possible but distinctly likely for most Americans, who at one time or another file taxes as singles while making minimum wage, and are therefore considered "poor." Later in life, of course, those same Americans increase their skill set and marketability to the point that they can earn more money, and thus, they are no longer "poor."
This is an interesting prospect, isn't it? At one point in your life, you were probably a number that contributed to a statistic that a leftist social engineer pointed to as evidence of "economic inequality." Many Americans have moved beyond their role as evidence of "poverty," but other young, unskilled earners have taken their place, and thus, poverty is still the epidemic that it was when you shared the burden of this systematically applied "poverty."
Data, ascertained and interpreted in this manner, becomes political fodder, not a reflection of facts, and not reflective of American society.
Nonetheless, the young man was unmoved by Friedman's explanation, and suggested:
Because it is not immediately easy to become in the wealthy class, there are certain parts of the system that make that virtually impossible for the real person.
This exposes a magnificent fallacy. There is a wide chasm between incredible success and incredible failure. We Americans call it the "middle class," to which most of us belong. It seems silly, but it's necessary to note that moderate success and moderate failure exist in that broad area between. Here, this young man is arguing for the state's responsibility to create "ladders of opportunity" out of poverty. Again, this is a position that our president has taken on many occasions.
The young man went on, and surprisingly, with a very substantial question:
I believe that this freedom, too, represents the freedom to equality, as opposed to liberty. And I wonder, is it possible to build a system based on this equality that I think most people agree in, and would not be willing to sacrifice to the liberty of freedom from?
After a disclosure that his response was a simple matter of "thought" and "reason," Friedman offered the profound response:
In my opinion, a society that aims for equality before liberty, will end up with neither equality nor liberty. And a society that aims first for liberty, will not end up with equality, but with it will end up with a closer approach to equality than any other kind of system that has ever been developed. Now that conclusion is based both on evidence from history -- across history -- and also, I believe, on reasoning, which, if you try to follow through the implications of aiming first at equality, will become clear to you.You can only aim at equality, by giving some people the right to take things from others. And what ultimately happens when you aim at equality is that A and B decide what C shall do for D. Except that they take a little bit of a commission off on the way. [Emphasis added]
That kind of says it all. The truth is that Barack Obama's vision for America entails a scenario where he can provide his promised equality, or "social justice," by giving a select few people in Washington the right to "take things from others." Nothing about that amounts to liberty; it's all about establishing equality. It is a vision that has been exposed for decades as a simplistic idea that cannot attain reality without the aid of tyranny. It has been tried many times in history. And it has failed in every application, just as it has obviously failed during Obama's tenure as president.
We cannot afford Americans being ignorant of this reality any longer.
Thursday, October 11, 2012
St. Paul Pioneer Press ^ | 10/10/12 | Thomas Sowell
Posted on Thursday, October 11, 2012 11:01:12 AM by rhema
When President Barack Obama and others on the left are not busy admonishing the rest of us to be "civil" in our discussions of political issues, they are busy letting loose insults, accusations and smears against those who dare to disagree with them.
Like so many people who have been beaten in a verbal encounter and who can think of clever things to say the next day, after it is all over, President Obama, after his clear loss in his debate with Mitt Romney, called Gov. Romney a "phony."
Innumerable facts, however, show it is our Commander in Chief who is Phony in Chief. A classic example was his speech to a predominantly black audience at Hampton University on June 5, 2007. That date is important, as we shall see.
In his speech -- delivered in a ghetto-style accent that Obama doesn't use anywhere except when he is addressing a black audience -- he charged the federal government with not showing the same concern for the people of New Orleans after hurricane Katrina hit as they had shown for the people of New York after the 9/11 attacks, or the people of Florida after hurricane Andrew hit.
Departing from his prepared remarks, he mentioned the Stafford Act, which requires communities receiving federal disaster relief to contribute 10 percent as much as the federal government does.
Senator Obama, as he was then, pointed out that this requirement was waived in the case of New York and Florida because the people there were considered to be "part of the
American family." But the people in New Orleans -- predominantly black -- "they don't care about as much," according to Barack Obama. If you want to know what community organizers do, this is it -- rub people's emotions raw to hype their resentments. And this was Barack Obama in his old community organizer role, a role that should have warned those who thought that he was someone who would bring us together, when he was all too well practiced in the arts of polarizing us apart.
Why is the date of this speech important? Because, less than two weeks earlier, on May 24, 2007, the U.S. Senate had in fact voted 80-14 to waive the Stafford Act requirement for New Orleans, as it had waived that requirement for New York and Florida. More federal money was spent rebuilding New Orleans than was spent in New York after 9/11 and in Florida after hurricane Andrew, combined.
Truth is not a job requirement for a community organizer. Nor can Barack Obama claim that he wasn't present the day of that Senate vote, as he claimed he wasn't there when Jeremiah Wright unleashed his obscene attacks on America from the pulpit of the church that Obama attended for 20 years.
Unlike Jeremiah Wright's church, the U.S. Senate keeps a record of who was there on a given day. The Congressional Record for May 24, 2007, shows Senator Barack Obama present that day and voting on the bill that waived the Stafford Act requirement. Moreover, he was one of just 14 Senators who voted against -- repeat, AGAINST -- the legislation that included the waiver.
When he gave that demagogic speech, in a feigned accent and style, it was world class chutzpah and a rhetorical triumph. He truly deserves the title Phony in Chief.
If you know any true believers in Obama, show them the transcript of his June 5, 2007, speech at Hampton University (available from the Federal News Service) and then show them page S6823 of the Congressional Record for May 24, 2007, which lists which senators voted which way on the waiver of the Stafford Act requirement for New Orleans.
Some people in the media have tried to dismiss this and other revelations of Barack Obama's real character that have belatedly come to light as "old news." But the truth is one thing that never wears out. The Pythagorean Theorem is 2,000 years old, but it can still tell you the distance from home plate to second base (127 ft.) without measuring it. And what happened five years ago can tell a lot about Barack Obama's character -- or lack of character.
Obama's true believers may not want to know the truth. But there are millions of other people who have simply projected their own desires for a post-racial America onto Barack Obama. These are the ones who need to be confronted with the truth, before they repeat the mistake they made when they voted four years ago.
Tuesday, October 9, 2012
Personal Composition | OCT 12, 2012 | Sampleman
Posted on Tuesday, October 09, 2012 9:13:34 AM by SampleMan
The media has been in a slumber for the last 4 years; not that the world has been quiet. We have lived in a world replete with economic collapse, international conflict, and social unrest, a time of tribulations and consequence, the likes of which we have not seen in over 70 years.
But a media which gleans only what it desires to further a socialist agenda has found no purchase on these stories. They had achieved their goal of placing a true socialist in the Presidency, and no bad news, no bad outcomes would be spoken of during his realm.
The barbarians have encroached to the gates, the heavy yoke of abusive taxation weighs heavily on the once productive land, and a lazy and demanding rabble grows in the streets. The media acting as sycophant to the king, reports that their Leader cares deeply and his policies are working. They keep heralding the coming dawn, as the night grows darker. Reports abound of the Queen’s grace and splendor, but not a word of what appears outside the windows escapes the party.
And now the day approaches when their chair, upon which they nap, is kicked from beneath them. They will awaken with shock and anger to report that a new world has befallen us all, and it is filled with horrors.
What the media will discover after Romney takes office:
1. We are in an economic depression worse than the 1930’s. The effects of which have been both forestalled and worsened by the government; however, the starting date will be falsely recorded as 2013.
2. The national debt is out of control and untenable. At historical rates, the interest alone will consume $1 trillion a year.
3. Our debt is junk. Only the Federal Reserve is willing to buy the Treasury’s bonds, and that is debasing the dollar.
4. Interest rates are not right. The media will not identify the Federal Reserve and massive Federal spending as the culprit, but it will suddenly notice that retirees can no longer live on their savings. It will also be noted that increases in the interest rate are hard on housing, businesses, and the government. Every side of the interest rate story will be used to cast President Romney in a bad light.
5. Massive inflation stirs in the land. The massive increases in the costs of food and energy will be reported as brand new events. We will be treated to personal accounts daily of families unable to make ends meet.
6. Personal net worth has plummeted and wages are down.
7. The unemployment rate is horrific and worsening. The U6 number (the real number of people unemployed) will be rediscovered and reported often. As will underemployment. This will suddenly become an immediate and pressing problem that cannot wait. The nightly news will discover the long lines of applicants and the personal stories of those families in need. This drum will beat daily, and the personal, caring interviews will reflect on the extravagant, uncaring White House. Improvements in decreasing U6 will increase U3, and this will be exploited by reporting the U6 number as a total and the U3 trend.
8. The world is on fire. Russia and China are playing for keeps and are eating our lunch. The Arab Spring bloomed into a thuggish Islamic caliphate. The world has the lowest respect for us in history and our enemies do not fear us.
9. We are at war and Americans are dying. The flag draped coffins have been increasing, despite the lack of nightly tallies. Peace Movement protests will magically reappear as a ubiquitous daily phenomenon. Deep concern will be deeply analyzed. Personal stories of disillusioned soldiers will be the norm.
10. Racist violence is exploding in our streets, and racial animosity is at a high for modern times. Despite the factual statistics, this will be reported as a predominantly white-on-black issue.
11. Local and state governments are mostly broke and have no recourse but to make cuts, with the Federal gravy train running off the rails. Every cut will be major and impactful, causing undue woe upon the land.
12. Every environmental boogey man will reemerge as an approaching ‘silent spring’ event. Every small gathering of the seriously concerned and every fax from their mother’s basement, will be headlined as a looming threat to our existence.
13. Public education will again be discovered to be woefully underfunded, as reporters interview the teacher’s union leaders. Interviews depicting every teacher living hand to mouth, and every classroom leaking water onto 20-year-old, tattered books, will chronicle our failures. No mention of mismanagement or misdirection of funds will be entertained.
14. All of these newly discovered issues will constitute a crisis of epic proportions. President Romney’s failure to cure these crises will be the summation for every panicked headline.
Finally, a new government in exile will be established and given a direct voice to the American people. Every governmental statement will be challenged by the government in exile. The apparatchiks of this Leftist government will brood and foment nightly with their media brethren concerning the evils of the government in power and the need for implementing their utopian plans, which they will assert have just never been tried.
Sunday, October 7, 2012
Wednesday, October 3, 2012
National Review ^ | 10/03/2012 | Thomas Sowell
One of the many false talking points of the Obama administration is that a rich man like Warren Buffett should not be paying a lower tax rate than his secretary. But anyone whose earnings come from capital gains usually pays a lower tax rate.
How are capital gains different from ordinary income?
Ordinary income is usually guaranteed. If you work a certain amount of time, you are legally entitled to the pay that you were offered when you took the job. Capital gains involve risk. They are not guaranteed. You can invest your money and lose it all. Moreover, the year when you receive capital gains may not be the same as the years when they were earned.
Suppose I spend ten years writing a book, making not one cent from it in all that time. Then, in the tenth year, when the book is finished, I may sell it to a publisher who pays me $100,000 in advance royalties.
Am I the same as someone who has a salary of $100,000 that year? Or am I earning $10,000 a year for ten years’ work?
It so happens that the government will tax me the same as someone who earns $100,000 that year, because my decade of work on the book cannot be documented. But the point here is that it is really a capital gain, and it illustrates the difference between a capital gain and ordinary income.
Then there is the risk factor. There is no guarantee to me that a publisher will actually accept the book that I have worked on for ten years — and there is no guarantee to the publisher that the public will buy enough copies of the book to repay whatever I might be paid when the contract is signed.
Even the $10,000 a year — which is less than anyone would earn in an entry-level job — is not guaranteed. If my years of work produced an unpublished manuscript, I would not even have been among the first thousand writers who met this fate.
Very similar principles apply to businesses. We pay attention to businesses after they have succeeded. But most new businesses do not succeed. Even those businesses that eventually turn out to be enormously successful may go through years of losing money before they have their first year of earning a profit.
Amazon spent years losing money before turning a profit for the first time in 2001. McDonald’s teetered on the edge of bankruptcy more than once in its early years. The people who ran McDonald’s resorted to desperate expedients just to keep their noses above the water while hoping for better days.
At one time, you could have bought half interest in McDonald’s for $25,000 — and there were no takers. Anyone who would have risked $25,000 at that time would be a billionaire today. But there was no guarantee at the time that they wouldn’t just be throwing 25 grand down a rat hole.
Where a capital gain can be documented — when a builder spends ten years creating a housing development, for example — then whatever that builder earns in the tenth year is a capital gain, not ordinary income. There is no guarantee in advance that the builder will ever recover his expenses, much less make a profit.
There are whole industries where no one can expect to make a profit the first year — publishing a newspaper for example. Virtually every major American airline has lost money in some years, and some of the biggest and most famous airlines have ended up going bankrupt.
If a country wants investors to invest, it cannot tax their resulting capital gains at the same rate as the incomes of people whose incomes were guaranteed in advance when they took the job.
It is not just a question of “fairness” to investors. Ultimately, it is investors who guarantee other people’s incomes in a market economy, even though the investors’ own incomes are by no means guaranteed. Reducing investors’ incentives to take risks is reducing the jobs their investments are likely to create.
Business income is different from employees’ income in another way. The profit that a business makes is first taxed as profit and the remainder is then taxed again as the incomes of people who receive dividends.
The biggest losers from politicians who jack up tax rates are likely to be people who are looking for jobs that will not be there, because investments will not be there to create the jobs.
— Thomas Sowell is a senior fellow at the Hoover Institution