I TOLD YOU SO!

MONTHS ago, I blamed low Fed interest rates, Congressional legislation pushing housing, and the securitization of mortgages and the GSEs (Fannie and Freddie) for the turmoil. In other words, GOVERNMENT caused the problem in that it created an atmosphere that was ripe for poor underwriting.

Recently, Rep. Jeb Hensarling (R-TX), a member of the Congressional Oversight Panel, published his own, alternative views to a report by the COP on the causes of the housing bubble bust, the credit contraction, and the economic downturn. In his alternative views, Rep. hensarling blamed almost exactly the same factors for causing the downturn as I did. Needless to say, I feel fully vindicated.

Democrats Are a Virus

Every 10 years, after each census, we have reapportionment. We redistribute Congressional seats based on the population of each State. In the last apportionment, Blue States, States dominated by a mob of Democrat voters, lost Congressional seats to Red States, States controlled by Republican voters. The magnet for Blue people to move into Red States has been good economic conditions. Now, why would Red States have good economies whereas Blue States would bad economies? The answer is pretty evident: the more free market economic policies of Republicans produce good economic conditions while the policies of the Dummyrats tend to create a drag on economies.

The effects of this flight of Blue people into Red States has been clear: Red states have tilted to the left. In Arizona, we used to have 6 Congressmen. Only 1 was a Dummycrat. Now, we have 8 Congressmen and the delegation is evenly split. Arizona also has a leftist Governor. The problem is that as Blue Staters move into Red States, they are not smart enough to shed their benighted ideas on government and the economy and then they vote for Dummycrats in a Red State. The newly elected Dummycrats then create the same horrid economic policies that the Blues fled in the first place. In essence, Dummyrats piss in their own playpool. This tells me that Dimocrats just aren’t smart enough to vote. They not only malf up their home states, but, like a virus, they spread to Red States and attempt to kill their new host. Since the Dims move from State to State and vote for those who would kill our economy, they end up retarding the growth of our nation as a whole. As far as I’m concerned, it’s one more reminder as to why our Founding Fathers opposed democracy, which they rightly saw as mob rule. To my mind, it’s one more compelling piece of evidence that we need to relimit the franchise. Democrats should be stripped of their rights to vote. At the very least, the States should increase the amount of time a new resident must be registered before he can vote in an upcoming election.

MY ABSENCE

Forgive my long absence. There have been few things recently that have gotten my dander up enough to really think about blogging, and when I have been upset, I didn’t write about the incidents. That being said, the openly homosexual Rep. Barney Frank (D-MA) recently upset me. I know it’s long, but hopefully you’ll find my arguments sound and compelling enough to read the whole thing.

THE OPINION PIECE IN THE FT

On Monday, January 14, 2008, Frank, Chairman of the House Financial Services Committee, had an opinion piece (http://www.ft.com/cms/s/cf807c4c-c241-11dc-8fba-0000779fd2ac,dwp_uuid=ebe33f66-57aa-11dc-8c65-0000779fd2ac,print=yes.html#) published in the Financial Times. The piece appeared on the same day Frank was to give a speech at Harvard’s JFK School of Business entitled, “We Told You So: A Liberal Perspective on 21st Century Capitalism,” (http://www.house.gov/apps/list/press/financialsvcs_dem/press011008.shtml). I suspect that the opinion piece closely reflects the indoctrination he planned to give the Harvard students. For all of Frank’s blazing wit on the House floor, in committee, and elsewhere, the article showed Frank to be either amazingly benighted; willfully ignorant; or deceptive, self-serving, and intellectually dishonest. My guess is the latter-most. Just about every assertion in the piece was flawed.

RADICAL DEREGULATION MYTH

Frank begins with a mischaracterization: that the US has been involved in radical economic deregulation since the Reagan Era. I wish! First, Reagan only suggested a minor roll-back of government and he was not successful on all his aims because he was saddled with a Democrat Congress. Second, Bush, Reagan’s VP, was far more moderate that Reagan was and was no champion of economic deregulation. The first President Bush was also saddled with a Democrat Congress as well, so because of partisanship, he could not advance much of an agenda at all, much less a deregulatory one. Third, Clinton followed Bush, and Clinton was no red-tape cutter. He was a fan of big government no matter how much Clinton and Gore claimed they were going to reform government while they were campaigning and making appearances on late night TV shows. Additionally, even if Congress tried to advance a deregulatory agenda, because of partisanship, Clinton would have vetoed any such legislation. The current president is so moderate that he’s been compared to Nixon. He’s a big spender and has supported big government programs like the prescription drug benefit and No Child Left Behind. At best, Frank’s claim is hyperbole and it’s not a good way to begin an opinion piece when you’re attempting to sway an audience.

NEEDLESS INCOME INEQUALITY WORRIES

Frank states that income inequality has risen. Leftists seem obsessed with income inequality, and the statement marks Frank as a socialist if not a communist. Only socialists and communists want to redistribute wealth so that the masses all have equal income. Those who believe in the free market have no interest in income redistribution. If you haven’t already, read Kurt Vonnegut’s short story “Harrison Bergeron.” You can find the short for free on the Web, just search for the terms. While Vonnegut cannot be classified as a conservative, the story clearly demonstrates that everyone cannot be made equally strong, beautiful, or smart. The masses may only be made equally weak, ugly, and stupid and it would take a leviathan government entity with incredibly invasive powers to enforce such. Even Friedrich Nietzsche argued that human equality is a pipe-dream. Milton Friedman stated, "The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both." Flatly stated, freedom and equality are mutually exclusive. Society MUST sacrifice one for the other. So, for Frank to even refer to income inequality not only betrays his socialism, but it also exposes him as a fanciful dreamer, someone with his head in the clouds, someone who tilts at windmills. It also exposes him as an enemy of freedom. Additionally, while there may be a growing gap between the rich and the poor, the poor are still increasing their wealth despite Frank’s claim that the poor have seen their incomes drop in real terms. By way of a simple word-picture, the rich are rising faster and the poor are rising slower, but BOTH are rising. Leftists are absolutely hand-wringingly worried about income inequality causing an uprising. This would only be the case if the poor could not obtain what they NEED. Most poor can not only obtain the things they NEED, but also indulge in buying some luxuries. As long as the poor have what they NEED and maybe some baubles and distractions, they’re not going anywhere. Later in the opinion piece, Frank states that economic growth alone is not enough to reverse income inequality. There could be a couple of meanings to this, but I suspect that Frank means that even if the poor are getting what they need and have a few baubles, the growing gap is not fair because the poor are jealous. Frank is just pandering to the poor and the guilt-ridden upper- and middle-class leftist elites for votes. For a good discussion of income inequality, take a look at this Hoover Institution discussion and pay particularly close attention to what Bruce Bartlett has to say: http://www.hoover.org/multimedia/uk/3003921.html. There is an old adage: you have to have money to make money. You have to have disposable income to put that capital to work via investments. So, in the crudest terms, the poor’s wealth can mainly be increased by wages whereas the wealthy can accelerate the growth of their wealth through investment. It stands to reason therefore that the gap between the rich and poor will grow naturally. But as long as the poor have hope of mobility and they can acquire what they need, who really cares about their petty jealousy? The Bible states that we will always have the poor, so, while charity is encouraged, it is relatively fruitless. Finally, who’s to say that the poor make the best choices with their resources? They are human and can make spending decisions that are detrimental to their financial futures. Also, who’s to say that government resources are going to be put to their highest and best uses in attempts to help the poor. Governments are ham-handed and they can be susceptible to waste and fraud. Both the discussion on income inequality and the short story reflect that it would take an enormous amount of YOUR taxpayer dollars to reallocate wealth, and even then, there’s no guarantee that any such programs will work.

GOVERNMENT MISPLACES CONSUMER CONFIDENCE

Frank claims that government presence in the market is ESSENTIAL to consumer confidence. In all frankness, the government’s imprimatur quite often leads consumers astray. Later in the article, Frank criticizes the originate-to-distribute models for mortgages. This means that a lender makes a mortgage loan to a borrower and then sells the mortgage to a securitizer. The securitizer masses lots of mortgages together then sells securities, or a fractional share in ALL the mortgages, to investors in return for a fraction of the combined mortgage payments, or a dividend. Now, the key players in securitizing mortgages are GOVERNMENT SPONSORED ENTERPRISES (GSEs) like Fannie Mae and Freddie Mac. The federal government set up Fannie Mae in 1938 under President Roosevelt. The government set up Freddie Mac in 1970 under President Nixon, the moderate. The GSEs are now private, but they have a government entity to regulate them (Office of Federal Housing Enterprise Oversight or OFHEO). By the way, the government is unhappy with OFHEO and may soon change OFHEO’s name and expect the name change to produce changes in the regulator’s behavior. Now, these government–spawned behemoths are largely viewed, rightly or wrongly, to have government backing, so that if the investments go bad, the government will bail out the investors. So, here’s a case where the government involvement leads consumers astray: the government will not repay investors for their losses. Without the perceived government backing via setting up the GSEs and OFHEO regulatory oversight, investors may not have bought securitized mortgages. In fact, Frank calls such securities opaque. Well, had investors not seen the government’s role in securitizing mortgages as meaning that investors could be less careful, perhaps investors would have demanded more transparency. Additionally, no one forced investors, foreign or domestic, to buy these securities. If they gambled by investing their money and the dice come up snake-eyes, they need to absorb their losses without any tears. Additionally, the GSEs have affordable housing goals. That means the government forces them to get people who have no business owning a home into homeownership. In essence, Fannie and Freddie are forced to try to buy up risky mortgages to low- and middle-income individuals. These risky mortgages get packaged up with good mortgages to be securitized. So, by their very definition, Fannie and Freddie sold securities that contained a high risk of loss because the securities were backed, in part, with bad mortgages. This DIRECTLY implicates Fannie & Freddie, government created and regulated entities, in the precipitation of the credit crunch.
One could also argue that the FDIC also encourages consumers to have confidence in banks they should not be confident in. Case in point would be NetBank, an internet bank that failed. Consumers trusted the bank to be solvent, but it engaged in behavior that caused it to fail. Had the government not offered it’s stamp of approval to NetBank, in the form of deposit insurance from the FDIC, consumers may not have trusted the bank. Let’s examine one more example: the government forces you to pay into Social Security. Do you believe it will be there for you when you retire and will it be enough for you to live on? The moral of all this: government involvement in the economy is not essential or even beneficial.

GOVERNMENT IS THE PROBLEM

Frank tries to blame the current lack of easy credit on free markets. This is patently wrong, and demonstrably so. First, the Democrats in Congress at the time of the Savings and Loan collapse in the 1980’s pushed for government intervention to get more people into home ownership. Second, most economists will point to the unreasonably low interest rates set by the Federal Reserve, a government entity, under Greenspan as a major cause of the housing bubble. Third, as Barney Frank points out, the government created Fannie and Freddie were buying and securitizing mortgages, which allowed lenders to be quickly recapitalized so they could make more and more mortgages. There was money to be made here by the unscrupulous. Mortgage brokers were paid by yield-spread premiums, which meant that the greater the difference between the rate at which the lender could borrow money and the rate at which the broker could get the borrower to borrow for, the greater the broker’s compensation. Since the broker was only getting paid and had NOTHING to lose, brokers did their best to soak borrowers. There were other problems in the mortgage system as well, such as appraisers being pressured to inflate the price of houses, prepayment penalties, low- and no-documentation loans, 100% financing, and most significantly, the insane idea that the housing bubble couldn’t burst. As investors began receiving less and less in dividends on their investments in mortgage-backed securities (MBS), it was clear that mortgage originators had made plenty of bad loans in the mad dash to make a killing. When the Fed, under Chairman Bernanke, restored some sanity to interest rates, it contributed to the credit crunch. This means, that because lending standards had been so lax, and because the market foresaw losses, lending standards tightened hard and only the credit-worthy were loaned to at all. While originators bear some of the blame for the credit crisis, the government is most at fault because it pushed those who had no business owning homes into homeownership, kept interest rates artificially low, and created the monsters to securitize mortgages. So, Barney Frank is ignoring the fact that the government created the problem, and is now calling for more government to solve the problem. This is absolutely typical of Democrats: they create a problem with government intervention, then claim that there is a problem which requires more government intervention. The end result is that we end up with more and more government to fix the problems that the Democrats have created.
Frank decries the loss of easy credit, but this shows him to be ignorant of banking history…and for someone who chairs the House Financial Services Committee, that’s horrifying. Take a look at banking history, even in West’s Nutshell series. You’ll see a pattern of banks being easy with credit associated with bank failures. The truth is that easy credit is bad. Credit should be tight. Loans should be made only to those who can repay them, and that means, not everyone should be getting mortgages. Some people should be renting and not owning.

OFFSHORING

Frank claims that the warning that financial services will go offshore if there is not significant deregulation is false. Then Frank changes the subject to confuse readers. He claims that the rest of the world has been affected by unregulated mortgage brokers. First, due to free markets overseas, many insurers are setting up reinsurers offshore. Also, as evidence that US insurance are overregulated by the states, there has been much discussion of an optional federal charter which would allow a new federal regulator to allow insurers to be licensed to operate nationwide with one stop. Under the current system, insurers have to obtain licenses in every state in which they wish to operate. That’s an inefficient system that is costly, and we all know that costs are ultimately passed on to the little guy. That’s prime evidence that Frank is wrong. Additionally, while mortgage brokers are unregulated, brokers would not have been out of control had 1) the government not set up entities to securitize mortgages, 2) the government not pushed to get more people into houses after the S&L collapse, and 3) the government not held interest rates artificially low under Greenspan. Again, it is the government that has caused the crisis and Frank’s remedy is more government. If government is going to do anything to help financial services, it needs to do things like allowing foreign financial services to compete in America, going full bore in kicking down barriers to US financial services competing in foreign countries, and reducing the regulatory and tax burden on financial services. Again, the answer is less government, not more.

GOVERNMENT IS ALWAYS SLOW

Barney decries the fact that government did not keep pace with market innovation. Well, duh!!! The government is ALWAYS behind the market, and it always will be behind the market. Government is never a leader, it only reacts to political whims. If government could create the next hottest product on the market, then the workers who conceptualized the idea would go into business themselves or patent the idea. Markets innovate because entrepreneurs want to make money. Government isn’t in the markets to make money. Government meddles in the market to slam on the brakes. If there is economic growth, it is because the private sector is able to overcome the burden that government places on it.

CLOSING

Frank sums up by saying there should be a robust debate over the role of government in “supporting” a capitalist economy. First, I’ve set forth arguments of how the government does more harm than good when it meddles in the economy. Unless it is lowering taxes, reducing the regulatory burden, or knocking down barriers, government does nothing to “support” the economy. Secondly, the debate should be over, and the socialists should have lost. If the Democrats want to continue some kind of debate, it’s because they are too stupid to know they lost when the Soviet Union collapsed.

The following text in arial font was written by Congressman Dan Lungren's staff (and approved by Congressman Lungren) in response to the looney Left's calls for President Bush's impeachment. Since letters containing this text have gone out to constituents, the text is in the public domain and should also be subject to FOIA requests. I've attributed the work to lungren's staff and in no way, shape, or form am I claiming this work to be my own, nor do I claim any rights to the following text. I am simply posting the text to inform both the Right and the lunatic Left as to why the calls for Bush's impeachment are shrill political screechings and have NO basis in law. As if the Left would care if there were a legal basis anyway.

Article II Section 4 of the United States Constitution provides:
The President, Vice President and all Civil Officers of the United States, shall be removed from Office on Impeachment for and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.

It is in my view not appropriate for this provision to be used for the purpose of constitutionalizing differences over policy. The question of treason, bribery, and other high crimes and misdemeanors is not relevant to the current debate over Administration policy. For example, the issue of NSA wiretaps does not even come close to the constitutional standard for impeachment. I would point out that as the United States District Court for the Southern District of New York in U.S. v. bin Laden has acknowledged, warrantless foreign intelligence collection has been an established practice of the Executive Branch for decades. It is interesting to note that this case, which preceded the current Administration, involved the surveillance of an American citizen. In fact, in both the Carter Administration, and the Clinton Administration warrantless searches were conducted. Former Deputy Attorney General John Schmidt, who served during the tenure of Attorney General Janet Reno, has written in the December 21, 2005 edition of the Chicago Tribune that:
President Bush’s post-September 11, 2001 authorization to the National Security Agency to carry out electronic surveillance into private phone calls and e-mails is consistent with court decisions and with the positions of the Justice Department under prior presidents.

Critics of the decision by President Bush have argued that the President should have used the Foreign Intelligence Surveillance Act procedures to obtain a FISA Court warrant. First of all it stretches credulity to suggest that the President was required by law to do so. The court with appellate jurisdiction over the FISA Court issued an opinion in 2002 relating to the issue of Presidential authority to conduct warrantless foreign surveillance searches. The court stated that, “We take for granted that the President does have that authority and, assuming that is so, FISA could not encroach on the President’s constitutional power.” Accordingly, there is a sufficient legal and historical basis for the actions of President Bush concerning the surveillance program. The question is not whether one agrees with the policy, but rather, whether it rises to the constitutional standard for impeachment. In my view, it clearly does not.

Another justification offered by some concerning the impeachment issue concerns the war in Iraq. Although we did not find weapons of mass destruction, the United States was not alone in concluding that the intelligence pointed toward the conclusion that Iraq possessed such weapons. The British government looked at the same evidence and came to the same conclusion. In fact, the French government did not doubt that Iraq possessed such weapons but felt that the United Nations inspection process should be completed prior to taking any action against the nation of Iraq. Within the United States itself, this was not a partisan issue. The Clinton Administration was of the view that Iraq possessed weapons of mass destruction. Accordingly, the decisions made concerning Iraq do not rise to the constitutional level concerning impeachment.

Again, it is my belief that differences over public policy do not form the basis for any consideration of impeachment. The actions of the Bush Administration do not come close to the threshold for this to be considered a legitimate issue.

DeLay leaving

The fact that DeLay has the foresight and humility to step down speaks volumes of him. Don't get me wrong, I'm not completely happy with "The Hammer". He has been a Congressional leader while Congress passed HUGE deficit budgets, driving up the national debt. DeLay also wrongly criticized Congressman Mike Pence when he presented Operation Offset to pay for the rebuilding of the Gulf Coast. However, that he acknowledges that he will be beaten by his opponent in November, that he has the humility to acknowledge that he wil be beaten, that he can admit that he is a liability to the party, are high marks in his favor.

Since the Republicans have been acting like socialists with their spending, I'm not sure they deserve to win re-election. Dr. Devine of the American Conservative Union has opined that it has been good for Republicans to lose on occasion. For example, when Ford lost to Carter, it paved the way for the Reagan revolution. Also, when Republicans are in the minority, they return to their conservative roots.

The loss of DeLay alone will not give the Demonrats a majority in Congress. Yet his resignation will go a long way to triage the Republicans' wounds. Perhaps, if DeLay is out of sight, and out of mind, his trials will not negatively affect other races nationwide. For instance, if Arizona were to lose Jon Kyl in the Senate, and voters largely blamed DeLay if DeLay were to remian in the race.... I think DeLay leaving gives the voters one less gripe when they choose which lever to pull in November.

Now, if the Republicans will just, as I have previously posted, steer hard right, they will either mitigate the effects of all their troubles, or will actually gain seats. While I hope that the Republicans gain seats and repent of their left-wing actions in the last few years, I'm not going to shed a tear if the likes of Lincoln Chafee, Mike DeWine, Olymia Snowe, and John McCain (yes, McCain is NOT currently up for re-election) were to lose. Those leftists do us more harm than good.

I understand that incumbents have an incredible re-election rate, but the grassroots conservative Republicans nationwide should recruit conservative challengers to challenge those Republicans who have been less than dedicated to the conservative cause.

The deleterious effect of minimum wage regulation

Few Studies on Minimum Wage

According to the Federal Reserve Bank of San Francisco, there have been FEW scholarly studies about the minimum wage, and those studies bucking the conventional wisdom have been roundly criticized. This sounds like ground RIPE for a monster doctoral thesis for economics PhD students. 2/3rd of the economics texts believe the minimum wage has more deleterious effects than positive effects. The studies that the Fed cited tended to show that the downward-sloping demand curve for low-wage labor was relatively flat, therefore inelastic. Meaning that an increase in the minimum wage may have the effect of decreasing the number of low-wage workers, but the job loss would not be great. What's so funny is that the leftists who scream bloody murder for increases inthe minimum wage are really harming those they seek to help: low-wage workers and poor consumers.

Illegal Labor and Exportation of Jobs

No one can deny that illegal migrants live in the US and they find jobs here. If there were no wage regulation, then the unfettered market would hire more people. I believe we see this in the much decried hiring of illegal migarant labor and the deportation of jobs outside the US. Businesses faced with the choice of hiring more expensive and highly regulated American laborers, or hiring unregulated illegal workers, or cheaper labor in another country are chosing to export jobs and hire ilegals. Since NOTHING happens without profit, there MUST be an incentive to hire illegal labor. The most obvious answer is that American labor is too expensive and too heavily regulated. I can think of no other answer. So, unless a study not only measures the few jobs lost due to the minimum wage, but also measures any corresponding deportation of jobs and hiring of illegal labor, it does not accurately record the negative effect of having or increasing a minimum wage.

Study Would be Massive

Seeing that even the Federal Reserve says there's been few studies on the effects of the minimum wage, and comtemplating the problem, has lead me to the conclusion that such a study would be a giant, and the EXACT effects of the minimum wage would be VERY hard to pinpoint. For instance, it is possible for an economy to outgrow the retardation caused by wage regulation. So, how is a leftist to be shown that the minimum wage retarded the economy when all economic indicators could point upward despite any weight from wages? Even if one were to compare the employment rate for low wage workers in a positive year where wages were not increased versus a positive year where wages were increased, it would be like comparing apples and oranges. Basically, you'd have to find years where the economy improved the same amount, or find years where the businesses employing low-wage workers grew at the same rate. There are a lot of ways to measure growth: net profits, an increase in distribution area, etc. Sounds like an impossible search to me. There are other ways to study the negative effects of wage regulation: find the number of businesses shutting down in a year where the wage was increased and ask those businesses that employ minimum wage earners if the increased cost was directly attributable to the business' failure, ask busineeses in the year that increase their prices if the price increase was attributable to a perceived increase in income by low-wage earners, etc. So, again, we can see what a MONUMENTAL study it would have to be. No wonder such a study has never been successfully undertaken.

Correlation Between Higher Income and Higher Prices

No one can deny that certain cities have higher standards and costs of living. In those cities, employees are paid more. As a result they have more disposeable income. Because they have more disposeable, they can far more easily bear the cost of increased prices on goods and services. Eager to maximize profits, sellers increase prices when the perception is that buyers will pay more. Hence, the higher cost of living in a place with greater wages. If we take this trueism and apply it to the minimum wage, one could conclude that there is an incentive for employers not only to recoup their losses by charging consumers more, but to increase their prices because they believe their own workers and others will pay more due to an increase in income. On the other side, once could argue that the impact of an increase in the minimum wage is so negligible that sellers will not increase prices. However, governments rarely just stack a single increase in the cost of doing business on employers. Quite often, legislatures, the executive, administrative agencies, and the courts all increase regulation. So, an increase in the minimum wage would be one of many pressures for employers to increase prices to recoup the losses engendered by the totality of new regulation of the market.

However, one may not deny that in economics, there is no action that doesn't result in a reaction. If a seller does not increase his prices, one of three things happens: he decides to just swallow the loss in profitability, he tries to pass on the cost to consumers, or he decides his endeavors are no longer profitable enough for his time and he quits. Most often, the businesses pass on their costs to consumers. Liberals believe this is a dandy solution...make everyone pay for their ideal market conditions. This is a problem of diffused costs and concentrated benefits.

Impact on Small Business

Many businesses in America are small businesses, struggling to get off the ground and be profitable. I've heard 90% of American businesses are small businesses, and it takes a number of years...I believe 10...to become profitable. In that initial 10 years, many owners fold up shop and call it quits because of thier losses. Undeniably, some businesses operate at the margin, holding on by a thread. Some of those marginal businesses employ low-wage workers. It stands to reason that those businesses at the margin can not tolerate increases in labor costs. One has to conclude that a certain number of businesses fold because of increases in costs. Some, like leftists, may not shed tears, but not because the fledgling small businesses are inefficient.

One other consideration, that may be unmeasurable, is the impact of a minimum wage or an increase in the wage on cost of entering the market as a new competitor. The minimum wage may so increase the cost of entrance that the formation of new businesses is retarded. With fewer new entrants, consumer choice is limited.

Leftists Substitute Their Judgment for Yours Through Government

Inevitably, the liberal response to warnings that the minimum wage cuts the American throat is that it is unconscionable for businesses to employ workers at less than a minimum wage. In essence, the leftist shrilly demands that his judgment be forced upon the market whether your conscience bothers you or not about labor.

Socialism discourages charity

Michael Medved just wrote an article that was e-mailed by Beyond the News. I am quoting his article from the mail below. His article speaks directly to one of my beliefs about taxation, charity, and the left. I have long held that socialism, and government programs for the poor actually depresses charity. Why give to anyone if the government is going to tax you heavily and redistribute your wealth to all the individuals and causes the governmnet sees fit? I posit that if we are allowed to keep our own earnings, we will end up giving more in charity than the government currently takes from us.

Medved's article:

A Massachusetts group called The Catalogue for Philanthropy just released its 2005 "Generosity Index"--comparing each state's ability to give (in terms of average adjusted gross income) with the percentage of taxpayers who actually report charitable donations. The results reveal a stunning political pattern: all 25 of the most generous states are red states that gave their electoral support to President Bush.But of the bottom 12--the stingiest states of them all in terms of charity--11 of 12 are blue states that backed John Kerry--with Massachusetts itself second to the bottom.The reason GOP states are so much more generous is both obvious and profound: conservatives view compassion as a personal responsibility, but liberals tend to see it as the government's job. One approach leads to individual commitment, while the other encourages the belief you can best help others by leaving it up to tax collectors and bureaucrats.



Medved's citation of the report is very telling. I'd wager that those red/Republican states have lower tax rates and less regulation, thereby giving the citizens more money to spend. I'd also wager that those State governments have fewer social programs and less wealth redistribution. If this is the case, I'd argue that the lack of forced State charity returns incentives to the default: a greater outpouring of the heart. One can then argue that government regulation and taxation hardens citizens' hearts, makes them more cynical.

Once again, the report Medved cites shows the government creates a floor for human behavior rather than encouraging man to reach his potential.

So, leftists, put your money where you mouth is. If you desire the greatest wealth redistribution, the strongest safety-net for the poor, LOWER taxation, END regulation, and END social programs. At least TRY this approach for a little while and see if your goals are not met.