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Posts Tagged ‘Election’

What will they do now?

Watch here.

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Sometimes politicians, journalists and the liberal left exclaim; “It’s just a tax cut for the rich!” and it is just accepted to be fact.

But what does that really mean?

Just in case you are not completely clear on this issue, I hope the following will help. Please read it carefully.

Let’s put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

a. The first four men (the poorest) would pay nothing.
b. The fifth would pay $1
c. The sixth would pay $3
d. The seventh would pay $7
e. The eighth would pay $12
f.  The ninth would pay $18
g. The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” Dinner for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still eat for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share?”

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to eat their meal.

So, the restaurant owner suggested:
a. The fifth man, like the first four, now paid nothing (100% savings).
b. The sixth now paid $2 instead of $3 (33% savings).
c. The seventh now paid $5 instead of $7 (28% savings).
d. The eighth now paid $9 instead of $12 (25% savings).
e. The ninth now paid $14 instead of $18 (22% savings).
f. The tenth now paid $49 instead of $59  (16% savings… the least proportionate savings).

Each of the six was better off than before.  The first four continued to eat for free, but once outside the restaurant, the men began to compare their savings:

“I only got a dollar out of the $20,”  declared the sixth man. He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The first nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works.   The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start eating overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D
Professor of Economics
University of Georgia

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A “Sound” Economy?

by Thomas Sowell

(reposted from here.)

“The truest thing that Senator John McCain said during this election campaign is what got him into the most trouble: “The economy is sound.”

“Sound” does not mean bullet-proof. Nor does it mean that everything is going wonderfully at the moment or that nothing needs to be done.

You may be as sick as a dog from having eaten the wrong thing. But that does not mean that you need to have your arm amputated or to receive massive doses of morphine. In other words, your body may be perfectly sound– and radical medical treatment can do more lasting damage than your temporary suffering will.

The political left has always known how to exploit temporary economic problems to create lasting institutions reflecting their ideology. The “progressives” did that during the brief time that America was involved in the First World War, less than a year and a half.

In that brief time, they clamped on all kinds of economic controls and even restrictions on free speech that led to landmark Supreme Court cases.

When the Great Depression of the 1930s brought many of those same “progressives” back to power, led by one of the “progressives” from Woodrow Wilson’s administration, Franklin D. Roosevelt, they brought the same mindset to government again, calling themselves “liberals,” now that the label “progressives” had been discredited by their previous actions.

By the end of the 20th century, “liberals” had again discredited themselves, to the point where they went back to calling themselves “progressives” to escape their past, much as people do when they declare bankruptcy.

Wars, economic crises and other disruptions all provide opportunities for the left to seize on current problems to create enduring changes in the institutions of society. That is what we are witnessing today.

The media have hyped current economic problems to the point where you might think we were heading for a replay of the Great Depression of the 1930s. They have been dying to use the word “recession” but there is a clear definition of recession– two consecutive quarters of negative growth– and we have yet to reach that.

If the meaning of words can be changed to suit political convenience, then discussions become an exercise in futility.

Official data show that the output of the economy in the most recent quarter is down– by less than one-half of one percent– but at last the media have one of those two quarters required to qualify as a recession.

Whether they will get the other quarter that they need, in order to start using the word “recession” legitimately, is another story. In fact, the data-gathering process is by no means so precise that we can expect the one-half of one percent decline to hold up, since such statistics often get revised later.

It is not just a question of being able to put scare headlines on newspapers or alarmist rhetoric on television. Such things are just the prelude to massive political “change” in fundamentally sound institutions that have for more than two centuries made the American economy the envy of most of the world.

If the left succeeds, it will be like amputating your arm because of a stomach ache.

To add to the painful irony, many of those who are most eager to have a massive government intrusion into the market are among those whose previous intrusions into the market are largely responsible for the current financial crisis.

It was the left– the “liberals” or “progressives”– who led the charge to force lending institutions to lend to people whose credit history made them eligible only for “subprime” loans that were risky for both borrowers and lenders.

It started way back in the Carter administration, with the Community Reinvestment Act, and gained momentum over the years with legal threats from Attorney General Janet Reno and thuggery from ACORN, all to force lenders to lend where third parties wanted them to lend. Now we have a bad stomach ache– and now the left wants to start amputating the market.”

– reposted by Julian

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A Perfect Storm

by Thomas Sowell

(reposted from original source link here)

“Some elections are routine, some are important and some are historic. If Senator John McCain wins this election, it will probably go down in history as routine. But if Senator Barack Obama wins, it is more likely to be historic– and catastrophic.

Once the election is over, the glittering generalities of rhetoric and style will mean nothing. Everything will depend on performance in facing huge challenges, domestic and foreign.

Performance is where Barack Obama has nothing to show for his political career, either in Illinois or in Washington.

Policies that he proposes under the banner of “change” are almost all policies that have been tried repeatedly in other countries– and failed repeatedly in other countries.

Politicians telling businesses how to operate? That’s been tried in countries around the world, especially during the second half of the 20th century. It has failed so often and so badly that even socialist and communist governments were freeing up their markets by the end of the century.

The economies of China and India began their take-off into high rates of growth when they got rid of precisely the kinds of policies that Obama is advocating for the United States under the magic mantra of “change.”

Putting restrictions on international trade in order to save jobs at home? That was tried here with the Hawley-Smoot tariff during the Great Depression.

Unemployment was 9 percent when that tariff was passed to save jobs, but unemployment went up instead of down, and reached 25 percent before the decade was over.

Higher taxes to “spread the well around,” as Obama puts it? The idea of redistributing wealth has turned into the reality of redistributing poverty, in countries where wealth has fled and the production of new wealth has been stifled by a lack of incentives.

Economic disasters, however, may pale by comparison with the catastrophe of Iran with nuclear weapons. Glib rhetoric about Iran being “a small country,” as Obama called it, will be a bitter irony for Americans who will have to live in the shadow of a nuclear threat that cannot be deterred, as that of the Soviet Union could be, by the threat of a nuclear counter-attack.

Suicidal fanatics cannot be deterred. If they are willing to die and we are not, then we are at their mercy– and they have no mercy. Moreover, once they get nuclear weapons, that is a situation which cannot be reversed, either in this generation or in generations to come.

Is this the legacy we wish to leave our children and grandchildren, by voting on the basis of style and symbolism, rather than substance?

If Barack Obama thinks that such a catastrophe can be avoided by sitting down and talking with the leaders of Iran, then he is repeating a fallacy that helped bring on World War II.

In a nuclear age, one country does not have to send troops to occupy another country in order to conquer it. A country is conquered if another country can dictate who rules it, as the Mongols once did with Russia, and as Osama bin Laden tried to do when he threatened retaliation against places in the United States that voted for George W. Bush. But he didn’t have nuclear weapons to back up that threat– yet.

America has never been a conquered country, so it may be very hard for most Americans even to conceive what that can mean. After France was conquered in 1940, it was reduced to turning over some of its own innocent citizens to the Nazis to kill, just because those citizens were Jewish.

Do you think our leaders wouldn’t do that? Not even if the alternative was to see New York and Los Angeles go up in mushroom clouds? If I were Jewish, I wouldn’t bet my life on that.

What the Middle East fanatics want is not just our resources or even our lives, but our humiliation first, in whatever sadistic ways they can think of. Their lust for humiliation has already been repeatedly demonstrated in their videotaped beheadings that find such an eager market in the Middle East.

None of this can be prevented by glib talk, but only by character, courage and decisive actions– none of which Barack Obama has ever demonstrated.”

– reposted by Julian

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