Monday, July 23, 2012

The Right is Wrong and the Left is Not Right


I like to think of myself as a political moderate.  And, it must be true since I managed to irritate both conservatives and liberals with my last post, Good, Better, Best... Never Let It Rest.

Oh, I got a few “atta boys”.  “Nice job, John”  “Keep it up”, etc.  However, overwhelmingly, I got the type of response I was hoping not to. 

It boils down to this:  the Right believes that Obama is a Socialist and that there can be no compromise with that element.  The Left rationalizes Obama’s record of economic non-achievement by citing irrelevant examples. 

Well, in the interest of continuing to irritate both sides, let me just say it:  The Right is Wrong and the Left is Not Right. 

There is an emerging monologue among those on the Left.  They postulate that government should raise taxes, invest in infrastructure and that somehow private enterprise will invest in R&D and create jobs.  One respondent asserted that “trickle down” doesn’t work but that “trickle up” does.  Their example is the 1950’s, a decade of the highest growth in our history coincident with the highest tax rates in our history.  I like to point out that “correlation is not causation”.  That high growth coincided with high taxes does not mean that taxes don’t reduce growth.  But, that seems to fall on deaf ears.

The major objection I have to this line of thinking is that no one wants to believe the data.  And, the data show that government spending does not get a financial return.  The “multiplier effect” where a dollar of capital investment gets 2 dollars in return has been shown to work with private investment but not with government spending.  There have been numerous studies demonstrating this result.  I will point out just one.

Liberal economist, Christine Romer, President Obama’s first Chair of the Council of Economic Advisors, wrote "The Macroeconomic Effects of Tax Changes" while she was an economics professor at University of California at Berkeley in 2007.  She concludes, in part, that “tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes. The large effect stems in considerable part from a powerful negative effect of tax increases on investment.”

Investment has a multiplier effect on GDP and improves employment prospects.  True, robust growth in the 1950’s was coincident with high tax rates.  It is also true that robust growth in the 19th Century was coincident with NO income tax. 

Now, I am not saying we should reduce taxes or even that we shouldn’t increase taxes.  I am simply saying we need to understand the impact of taxes and ask ourselves how much growth we are willing to sacrifice for the government we want. 

Conservatives for their part advocate further tax reduction.  The Supply Side theories of Arthur Laffer were the underpinning of Reagan’s economic policies and they have served us well.  They are right.  They served us well for about 20 or 25 years.  However, in the last decade middle class wages have stagnated while the costs of healthcare and education have skyrocketed. 

As for “trickle down economics”…  Well, there is no such proven economic theory.  It’s more of a political phrase than an economic theory.  And, lately, not much is trickling down. 

Governance is more than just economics.  In colonial times, our founding fathers recognized the need to address the common good, the need to place each selfish and separate interest in the context of the “res publica”, literally the “public thing”. 

Conservatives need to recognize that government should play a role in helping its people through the transition to a global economy and liberals need to recognize that we need a sustainable financial platform to provide for it.

In his Sunday Op-Ed piece, author and New York Times columnist Tom Friedman advocated that we focus on supporting entrepreneurship and suggested “…we should aspire to be the world’s best launching pad because our work force is so productive; our markets the freest and most trusted; our infrastructure and Internet bandwidth the most advanced; our openness to foreign talent second to none; our funding for basic research the most generous; our rule of law, patent protection and investment-friendly tax code the envy of the world; our education system unrivaled; our currency and interest rates the most stable; our environment the most pristine; our health care system the most efficient; and our energy supplies the most secure, clean and cost-effective.”

Our political debate should be about how to achieve the objectives so concisely presented in Friedman’s column.  Instead we have, thus far, been treated to more of the same unproductive, partisan nonsense that has caused us to fail to address our long term challenges since the turn of the century.  Is it any wonder that an increasing number of voters identify themselves as independents.?

Obama and Romney are serious, intelligent people with a sincere desire to advance the American cause and very different approaches to doing so.  I can only hope that the presidential debate will turn to that discussion.

WHO WILL LEAD?

            Recommended reading:

                        The Center on Budget and Policy Priorities
                        The Microeconomics Blog
                        Proceedings of the National Academy of Sciences of the United States


15 comments:

  1. Actually, I couldn't agree less with your graph. As I see it, it's precisely the so-called middle ground that amounts to the greatest level of slavery with both Fascism and Anarchism providing the greatest amount of freedom and closing circle rather than being opposites.

    My views are a pretty personal mixture between Socialistic and Capitalistic ideas with a focus on freedom or expression, individual responsibility, solidarity, respect for nature and its laws, respect for genetic and cultural differences, personal growth, solidarity, etc. The foundational principle of my personal views is to find balance and harmony between structure and chaos. Every struggle in life could at the core be regarded as a struggle for balance between security and freedom, planning and spontaneity, protection and risks, trust and independance, etc. Every personal and societal conflict results from an imbalance between structure and chaos in its many facets and imo so-called "moderates" do nothing but reduce that balance by providing us freedoms we don't need and taking away freedoms that are essential.

    Personally, I'm pretty anti-ideological and reject any authority that is not based on merit. If I had to label my views at all, I would consider myself a Third positionist. The following text comes from source : http://thirdpositionism.wordpress.com/what-is-third-positionism/ and explains the basic tenets of Third Positionism, which is an umbrella name for various ideologies that all reject current mainstream ideologies and provide their own mixture of Capitalist and Socialist ideas in an attempt to restore the balance that is totally gone today.

    The Third Position, or Third Positionism, is a political ideology advocating the usage of middle-ground policies between what would traditionally be called Socialism (heavy State control over economic mechanisms, workers’ ownership of the means of production, heavy taxation and class warfare) and Capitalism (free-market liberalism, the priority of big business in a competitive, deregulated economic environment), while proposing new and revolutionary policies to accompany a Third Positionist manifesto. Given the history of various Third Positionist organizations and ideologies, these policies often include a mix of very different strands of thinking, such as nationalism, economic corporatism, economic distributism, hierarchical socialism, Bolshevism, traditionalism, authoritarianism and even anarchism.

    The main trait in all these trains of thought is their opposition to liberal democracy, global capitalism and internationalist socialism, presenting themselves as nationalist alternatives to an increasingly globalized society. Most Third Positionists advocate a return to a pre-capitalist, pre-communist and pre-liberal society based on purely national values, the individuality of all nations and the freedom of all nations to decide what political system best fits their cultural heritage.

    Due to the syncretic nature of Third Positionism, several ideological currents have developed that have presented themselves as third-way alternatives to a circular political spectrum with globalism at both its theoretical “ends.”

    * Fascism
    * Corporatism
    * Distributism
    * National Bolshevism
    * National Socialism
    * National Syndicalism
    * Strasserism
    * National Anarchism

    Posted by John Slegers

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  2. Sorry but what is National Anarchism ?

    And in what way is Anarchism involved in slavery ?

    Anarchism is ultimate freedom.
    Posted by Harold Bernaert

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  3. @ Harold Bernaert :

    " Sorry but what is National Anarchism ? "

    It is a movement that puts an emphasis on the importance of shared genetic and cultural heritage as well as individual freedom, honor, courage, duty and individual responsibility. It mixes elements of nationalism and conservatism with a form of Anarchism. Usually, that form is Anarcho-Syndicalism or Anarcho-Primitivism.

    " And in what way is Anarchism involved in slavery ? "

    In a Fascist society, survival of the fittest and the struggle for dominance plays an important role at the level of countries or ethnic groups.

    In Anarchistic society, survival of the fittest and the struggle for dominance plays an important role at the level of individuals.

    Both offer a lot of freedom to those fit enough to dominate but could also lead to the enslavement of the weak by those who dominate them.

    Without a national government, governments may not be able to dominate you any more but individuals can easily replace them.

    Posted by John Slegers

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  4. @John

    I understand that in Anarchistic society, survival of the fittest and the struggle for dominance plays an important role at the level of individuals.

    But.

    Anarchy (from the ancient Greek ἀναρχία, anarchia, from ἀν an, "not" +‎ ἀρχός arkhos, "ruler", meaning "absence of a leader", "without rulers"),

    So as soon as a dominant person enslaving others in an Anarchistic society it stops being anarchistic and becomes autocratic.

    You can not have one ruling over an other in an anarchistic society.

    Slavery and Anarchism do not mix.
    Posted by Harold Bernaert

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  5. @John

    Could you clarify genetic and cultural heritage as it relates to your ideals? Just interested.

    @John (regarding topic) You are correct, no one is right in this debate. And when I say debate, I mean shouting match and childish games. After the Tea Party took the stance to fight a war on funding for America's education, I lost all respect for the Republican party. We have a failing educational system, which our European Mensans are always quick to point out, and yet people in society feel the need to defund it.

    However, you can only spend so much money as a government. I applaud Obama taking on healthcare. Did he do it the right way and half-cocked. Yep. He is a Left-Wing George W. Bush. But at least he did something.

    I can only hope that the anti-American movement in America will subside, and we can begin to fix our problems from the people up. The only way to change our current direction is to come together and talk, stop electing officials that refuse bi-partisan dialogue, and use the intellect that permeates through our society to solve our problems.

    Or as John would like, there are always the Anarchists.
    Posted by Jared Schnader

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  6. It seems I made a poor choice of a graphic for the piece.

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  7. @ Jared Schnader :

    " Could you clarify genetic and cultural heritage as it relates to your ideals? Just interested. "

    Consider the following concepts :
    * in-groups vs out-groups ( http://en.wikipedia.org/wiki/Ingroups_and_outgroups )
    * the selfish gene ( http://en.wikipedia.org/wiki/The_Selfish_Gene )
    * beliefs in abstract ideals as powerful illusions, called spooks by Stirner ( http://en.wikipedia.org/wiki/The_Ego_and_Its_Own ) and memes by Dawkins ( http://en.wikipedia.org/wiki/Meme )
    * the prisoner's dilemma ( http://en.wikipedia.org/wiki/Prisoner%27s_dilemma )
    * human inequality ( http://en.wikipedia.org/wiki/The_Bell_Curve )

    Once you understand those principles in their core aspects, you understand that :
    * people are more empathic towards those they share a genetic or cultural identity with
    * people feel more free and happiers in a society where their personal sense of justice and virtue strongly correlates to those of their neighbors and the laws of the land
    * people base their identity to a significant degree on the social customs they adopt and the people they share those customs with
    * people can be taught to believe everything with passion and act according to those beliefs if only you teach them early enough and the teachings "feel" right to them
    * people feel more confident and comfortable among people who are like them
    * ....


    So how does this relate to my ideals? Well, it is my opinion that people should be free to start their own communes based on their own criteria, which could be anything from race, gender, sexual preference, religious beliefs, sense of morality, etc. They should be able to develop their own unique culture that they can teach to new comers and new borns who themselves are free to reject that culture and move to another commune more in line with their way of thinking. Every commune forms its own cultural island that maintains and builds on its own traditions while being tolerant of other ways of life and thinking as long as those do not interfere with the free expression of their own culture in their own commune. This way, personal freedom and collective culture can coexist without one smuthering the other.

    " Or as John would like, there are always the Anarchists. "

    Please take some time to read "Industrial Society and Its Future" ( http://editions-hache.com/essais/pdf/kaczynski2.pdf ) and tell me what you think when you have. Personally, I consider it one of the most insightful texts I've ever read and it made me realise that the problem is not just ideology or religion but a form of technological and cultural slavery that can only be overcome by allowing civilisation to collapse and starting over from scratch.
    Posted by John Slegers

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  8. Good article but I really love the title
    Posted by Robert Spencer

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  9. John

    We love ya man, Right or Wrong(Left) ....... LOL

    With that being my starting point, I just want to say, I think that "independant & privately" owned businesses are better at spending their money than allowing the Federal Government to bet on the winners and losers. Look at the record of the investments of the obama administration. I challenge anyone to truly find something that might be considered a winner in the truest sense of the word. How many billions of dollars have been pumped in to the "Green" energy sector only to see company after company (run by obama supporters) going belly up?

    My point is, that I would rather see the private sector control their own funds rather than being taxed to death to give the money to some bureaucrat that is going to decide that it is politically expedient to advance an agenda that has nothing to do with creating real job growth and that fufills some need with a viable technology solution.

    Am I totally happy with the Right side of the asile, hell no! But in the upcoming election, the only candidate that has ever held a job and who just might be better qualified to make a decision on how much money government should push towards the private sector is Mitt Romney. Obama's track record on putting good money to bad use is without a doubt 100%, so I would have to give that to him.

    Lastly, I would have to agree with you, the Left will never be Right, not with the polarization of the leaders in Congress right now. I am just hoping that the Right can swing back toward a more balanced approach once the Uber-liberal Left is defeated.

    Thanks as always for your thought provoking pieces. Take care my friend.
    Posted by Ken Mayeaux

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  10. Great to hear from you, Ken. I can't disagree with much that you have said. I don't quite understand how the Federal Government got into the venture capital business.

    That said, the government does (and has) engage in pure research that has had a tremendous benefit. The best of it is bleeding edge that will not see a commercial application for decades. In other words, private capital won't invest. Great examples include the silicon chip, the Internet and GPS . There is an evolution that usually leads to commercialization about 30 years after the invention. We are currently seeing it in the space program where companies like Virgin Space are getting into commercial space travel.

    I hope we continue to fund DARPA and NASA so we can continue to see development of this type.

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  11. John I totally agree. Research and development is a long way off from betting on companies (in the obama administration these bad bets have been tantamount to cronyism) and doing pure research that can be useful to emerging businesses.

    One of the things I would really like to see is a vastly scaled down DOE and all that money being used to fund research instead of pushing this Green vs Fossil war that is being waged by the current administration. The DOE has long been a basically useless agency that has grown to a whopping 16,000 employees that has produced no energy plan and has done very little to promote the increase in fossil fuel production from USA controlled reserves.

    Still waiting for the CHANGE in DC ..........

    Saw the new Partner title on your profile. Hope that means more opportunities for you and your business. Congrats .......
    Posted by Ken Mayeaux

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  12. When I was at the Academy, long ago, they did teach some economics. Econ 101 says that a country has to make decisions about guns or butter. Trying to balance the two options. Under the right wing president Bush, taxes were reduced and two wars were started. Is that a way to balance a budget????

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  13. Now, that's a question that answers itself! :)

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  14. John,
    Bravo! on your two articles here referenced. Very clear and concise.
    Indeed: Who will lead?

    Ultimately, I believe that we are struggling with Group Think, that mode of thinking that happens when the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives. The Parties would have us believe that we are ever on the horns of a dilemma where one is right and the other wrong. Such is simply not the case unless we choose to accept such a small minded approach.

    We are struggling with philosophies and sensibilities defined by our exposure to media and culture where political pundits twist, spin, and shape each story to suit the purpose of those who pay their wages. Media channels feed information appetites to reinforce opinions and solidify voting blocks, whether political or economic and the Internet empowers each of us to lead by presenting us with the freedom and opportunity to express our opinions, gather audiences, and generate and make known alternatives not elsewhere expressed.

    Who Will Lead? Those who will lead are they who present valuable and actionable alternatives that find favor with the masses and create a wave of change taking us to a better future for all as so well stated in the following quote excerpted from Robert F. Kennedy’s “Ripples” speech delivered at the University of Capetown in South Africa on June 6, 1966.

    "Few will have the greatness to bend history; but each of us can work to change a small portion of the events, and in the total of all these acts will be written the history of this generation. . . .It is from numberless diverse acts of courage . . . [and] … belief that human history is shaped.

    Each time a person stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance."

    - Robert F. Kennedy

    Posted by Daniel Latch

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  15. Thanks, Daniel. I love the RFK quote. I have a letter from the late Senator congratulating me on my appointment to USNA.

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