Economic Philosophy

Sowell & Williams: 2 Issues that Unite the Races

Reaching out to Blacks does not mean offering them the same programs that have destroyed their families and blighted their hope for achieving the American Dream. Studies show that the Way of the American Dream is paved by Faith, Stable two-parent families, Education, and Hard Work.  These three things seem to make avoidance of having children out of wedlock before graduating high school, gang-related activity, crime, and violence more likely.

In Thomas Sowell’s JWR column of March 25, 2014, Republicans and Blacks , Mr. Sowell cites School Choice and Minimum Wage Results as two topics Republicans should publicize and shout out about in order to reach out to Blacks. In the article, Sowell further cites the book, Race and Economics by Walt Williams, as a definitive study of government programs which have hurt Blacks.

Walt Williams on School Choice:

“Though many black politicians mouth that we should fix, not abandon, public schools, they themselves have abandoned public schools. They see their children as too precious to be sacrificed in the name of public education. While living in Chicago, Barack Obama sent his daughters to the prestigious University of Chicago Laboratory Schools. When he moved to Washington, President Obama enrolled his daughters in the prestigious Sidwell Friends School. According to a report by The Heritage Foundation, “exactly 52 percent of Congressional Black Caucus members and 38 percent of Congressional Hispanic Caucus members sent at least one child to private school.” Overall, only 6 percent of black students attend private school.” …

“According to a 2004 Thomas B. Fordham Institute study, more than 1 in 5 public school teachers sent their children to private schools. In some cities, the figure is much higher. In Philadelphia, 44 percent of the teachers put their children in private schools; in Cincinnati, it’s 41 percent, and Chicago (39 percent) and Rochester, N.Y. (38 percent), also have high figures. In the San Francisco-Oakland area, 34 percent of public school teachers enroll their children in private schools, and in New York City, it’s 33 percent.”

“Only 11 percent of all parents enroll their children in private schools. The fact that so many public school teachers enroll their own children in private schools ought to raise questions. After all, what would you think, after having accepted a dinner invitation, if you discovered that the owner, chef, waiters and busboys at the restaurant to which you were being taken don’t eat there? That would suggest they have some inside information from which you might benefit.”
Williams’ JWR column, Racial Trade-offs, of Oct. 9, 2013

Thomas Sowell on Minimum Wage:

“Minimum-wage laws are classic examples. The last year in which the black unemployment rate was lower than the white unemployment rate was 1930. That was also the last year in which there was no federal minimum-wage law.”

“The Davis-Bacon Act of 1931 was in part a result of a series of incidents in which non-union black construction workers enabled various contractors from the South to underbid northern contractors who used white, unionized construction labor.

“The Davis-Bacon Act required that “prevailing wages” be paid on government construction projects — “prevailing wages” almost always meant in practice union wages. Since blacks were kept out of construction unions then and for decades thereafter, many black construction workers lost their jobs.”

“Minimum wages were required more broadly under the National Industrial Recovery Act of 1933 and under the Fair Labor Standards Act of 1938, with negative consequences for black employment across a much wider range of industries.

“In recent times, we have gotten so used to young blacks having sky-high unemployment rates that it will be a shock to many readers of Walter Williams’s Race and Economics to discover that the unemployment rate of young blacks was once only a fraction of what it has been in recent decades. And, in earlier times, it was not very different from the unemployment rate of young whites.”

From Thomas Sowell’s article of April. 27, 2011 in National Review,  Race and Economics

With Republicans Like These, Who Needs Democrats?

By Kyle Scott

Since the 2012 election, there has been quite a lot of talk about Harris County moving from Republican to Democrat. But anyone who is paying attention to this legislative session will see that the Republican legislators from Harris County are not particularly conservative on budgetary matters anyway. There has been a 26% increase in this budget over the previous budget. Rather than banking additional tax revenue this legislature has decided to spend more and then take $4 billion out of the rainy day fund.

With the passage of a budget that allowed for a raid on the ‘rainy day fund’, for an encore Harris County-based Representatives Dan Huberty, Patricia Harless, and Debbie Riddle joined with Democrats to support HB 16 and HJR 2 thus allowing for the rainy day fund to be raided with impunity. The Senate passed a bill that included a baseline under which the rainy day fund would not drop—a poor consolation for raiding the fund in the first place but a consolation nonetheless. When that bill came before the House the baseline was removed. Now, thanks to a coalition of irresponsible spenders, the rainy day fund can be raided with impunity.

The irresponsible budgeting of the Texas legislature during this legislative session has even garnered national attention with the Wall Street Journal comparing Austin to Sacramento. Texas is experiencing a boom—thanks to oil—in the same way California had experienced a boom—thanks to real estate—when it had decided to increase spending in the face of a positive financial outlook. Texas legislatures have failed to learn from California in recognizing that good times come to an end and a budgetary surplus can come in handy down the road. When one asks the government “How much can you spend?” the government usually replies, “How much do you have?” and then it takes some more.

Even a casual observer of politics and economics knows that saving money in good times is generally a good idea and that spending like the good times will go on forever will wreak havoc on a budget in the long run. The Texas legislature would do well to make two adjustments to the budgetary process in order to prevent these mistakes. First, we need a zero-based budgeting approach for all state agencies. Zero-based budgeting would allow legislators to assess how much money is really needed by an agency and not just how much money an agency usually gets. Second, discretionary spending should be handled after mandated spending and matters such as transportation and water are dealt with. Right now legislators are trying to say they need to raid the rainy day fund for roads and water. And they are right, we need to fund road and water projects. But these projects should have been dealt with first, not last, and discretionary spending measures should have been moved to the back of the line. By moving the most important matters to the back of the line legislators manipulated the situation to make it appear as though there is more of a scarcity of resources than there actually is. While money is the most important thing in making budget decisions, timing comes a close second.

We should all be alarmed by the dangerous and irresponsible budget practices by this legislature. What should be particularly alarming is that the conservatives are not acting like conservatives which means the spending will only increase and raiding the rainy day fund will only continue.

– See at: Dr. Scott’s Blog. .

How Gov’t Regulations Began as Corporate Cronyism

Crony Capitalism is NOT Capitalism!

AEI Feb. 2013 Panel: Big Government and Big Food vs. Food Trucks, Foodies, and Farmers Markets – click here.

Earlier this year, KWTP attended a local Chamber Taste of the Town event where I met a couple who made the local areas Farmers Markets circuit. They explained to me how new regulations and fees were forcing them out of the market. They had to purchase expensive equipment they did not need for the produce and home-made soaps and lotions they produced. Then had to pay large fees to all three counties the FMs they attended were in. This was one of those small businesses that used to crop up and grow, hiring more Americans as they did so. But now, regulations and laws passed by our local and state governments at the behest of large dairies and farms intent on pushing little men businesses out of the market were strangling them into bankruptcy.

It is simply un-American and antithetical to the level playing field competition and free market ideology that made this nation great.

The vise is long, and a little boring to those who don’t care about the philosophy and history of current legislation, but given where our country is today, it is something every one of us needs to see. I urge you to follow the link and watch the video of this panel discussion.

And for the record, I have tried to get local media interested in the plight of some of our small farmers and businessmen at our local Farmers Markets to no avail BEFORE I ever found this link.

Why tax increases don’t work – Economics – AEI

Why tax increases don’t work – Economics – AEI.

MUST SEE VIDEO: Quantitative Easing Explained

The Surprising Moral Case For Free Enterprise

Free Enterprise is based on those needing jobs, goods, or services freely contracting with others to purchase those items or services at a mutually agreeable price. It is a win – win situation for both parties. Not so when the government gets involved and burdens some participants with arduous regulations dictating which products or services must be utilized, and/or placing taxes or minimum wage regulations into the mix.

A good video summary of Arthur Brooks’ book, The Road to Freedom, with five two-minute segments.

Policies based on the Moral Case for Freedom:

Tax Reform:

In 2011 46% of households had zero or negative federal income tax liability.

In 2010, 60% of families received more from the government than they paid in taxes.

Individual and corporate tax compliance costs $163 billion, more than $500 per person.

The U.S. top combined corporate tax rate is the highest in the industrialized world.

“Tax reform is a great opportunity to make a fairer system that will encourage economic growth and unleash the creative power of the American people. ”— Chad Hill, AEI

Entitlements:

Most seniors have withdrawn more from Social Security and Medicare than they paid in.

The Medicare hospital care fund has been running a deficit since 2008.

Social Security will be insolvent in 2036.

The U.S. currently spends 9.9% of its GDP on entitlements.

The Social Security system still leaves almost 10% of seniors in poverty.

“People need a hand up, not a hand out. All policy direction should be to empower individuals to run their own lives.”— Rupert Murdoch, founder, chairman and CEO, News Corporation

Job Creation

We are experiencing the longest high-unemployment streak since the Great Depression.

The real unemployment rate is 10.4% when discouraged workers are counted.

18% of young Americans said they delayed marriage due to job worries or unemployment, and 23% delayed starting a family.

“We can spark an economic recovery by unleashing the job-creating power of business, especially small entrepreneurial businesses, which fuel economic and job growth quickly and efficiently.”— Charles Schwab, founder and chairman, Charles Schwab Corporation

Economic Growth

While average economic growth from 1950-2000 was 3.6%, from 2000 to 2010, economic growth fell to 1.7%.

To lower our deficit to 5% of GDP, we need to achieve a year-on-year 4% growth rate.

Every 1% of additional growth today will double real incomes 72 years from now.

“I grew up with great values and tremendous opportunities … I want my three kids and other’s people’s children to have the same opportunities that I had.”— Joe Ricketts, founder and former CEO, TD Ameritrade

National Debt

U.S. debt is 100% of annual GDP, which most economists characterize as an unsustainable level.

In 2011, the U.S. borrowed about $4,152 for every person in America, totaling $1.3 trillion.

Servicing the national debt will cost $1 trillion per year by 2023 under current policy.

Closing the spending gap through increased revenues over 25 years would require a 56% tax hike.

“For far too long, short-sighted politicians have paid for today’s promises with tomorrow’s prosperity. If Congress doesn’t take serious action to reign in federal spending, our generation will be heirs to a legacy of higher taxes, more debt, and fewer opportunities.”— Fara Klein, Brown University

Here is Arthur Brooks’ video on the Surprising Case for the Morality of Free Markets.