Friday, October 06, 2006

Don't be suckered by Democrats' economic bullshit

Unfortunately, a whole lot of Americans would. And will in November.
Pelosi emphasizes economic proposals

WASHINGTON - Pointing toward midterm elections, House Democratic leader Nancy Pelosi promised on Thursday to raise the minimum wage while cutting taxes to spur economic growth and help the middle class.

She also vowed that Democrats will keep U.S. jobs from going overseas by repealing current tax incentives if voters give her party the reins of Congress on Nov. 7.

"This economy is making the super-rich richer, and leaving middle-class American families further behind, deeper in debt and struggling to make ends meet," Pelosi, D-Calif., said in a speech at Georgetown University.

"Democrats believe in the marketplace," she said. "Choices made by President Bush and Republicans in Congress have created a market failure — they have consistently rewarded wealth without rewarding work."

She was one of 10 Democratic leaders giving economic speeches across the country this week.

Democrats emphasized the economy as House Republicans were consumed with the fallout of a virtual sex scandal that led to the resignation of former Rep. Mark Foley, R-Fla., and has prompted calls for House Speaker Dennis Hastert, R-Ill., to step down.

Five weeks before the elections, polls show the public favors putting Democrats in charge of Congress.

Democrats also have the advantage on the economy as a campaign issue.

An Associated Press-Ipsos poll released Thursday found that 51 percent of likely voters say Democrats would best handle the economy while 38 percent say Republicans would do a better job.

Republicans took issue with Pelosi's remarks.

"The Democrat plan of heaping taxes on parents, families and employers has failed in the past, and is an astonishingly foolish agenda for the future," said Sen. Mitch McConnell, the No. 2 Senate Republican.
So if "Democrats believe in the marketplace," then why are they constantly pushing for a hike in the minimum wage? If they truly wanted to let markets work, they would let employers and employees come to agreements (including on wages) without any government interference. That is letting the market work. Anything else is economic bullshit, and any politician, pundit or economist who advocates more government to help the marketplace is a damned fool or a liar. Your choice, Nancy.

Why is Pelosi ranting like a typical lunatic moonbat, without specifying exactly what the NLRB did? Well, the board ruled a few days ago that if you spend 10 to 15% of your time supervising someone, you're classified as a "supervisor" and hence can't join a labor union. Labor unions are up in arms, because that could mean 8 million fewer people eligible to join them. That's untold millions, if not billions, lost to labor unions' coffers, which means the overpaid bosses might not always be able to travel first-class and in chauffered luxury cars.

If Pelosi weren't so disingenuous about her professed belief in "the marketplace," she'd have simply called for the abolishment of the NLRB, and permitting nurses, whatever their duties, to negotiate their pay with their employers without any interference from government. That is letting the market work. Anything else is economic bullshit, and any politician, pundit or economist who advocates more government to help the marketplace is a damned fool or a liar. Your choice, Nancy.

If you're a nurse who's now categorized as a "supervisor," and you don't like that your employer can use the NLRB to prevent you from joining a union, well, nobody's forcing you to work at that facility, nor is anyone forcing you into that line of work. A while ago I read an article about nurses "struggling to balance" work with their home lives, and I can't say I felt one damned bit of sympathy. If they can't cope with the demands of the workplace, then they need to find easier jobs. My new responsibilities at work are very demanding, and a terrible strain on my eyesight, and though my boss is one of the nicest guys you could ever meet, he'd surely remind me that nobody's forcing me to stay in my job. Nobody's forcing him to work his long hours, either.

Democrats talk all the time about "rolling back Bush's tax cuts for the rich," when in fact it's those tax cuts that are the most beneficial to the economy. A tax cut for the typical American just doesn't approach the magnitude of a tax cut for "the rich," whether it's eliminating the deadweight loss of government spending or increasing workers' incentive to produce more. Lower wages by nature don't have much disincentive to work more, whether overtime or a side job. On the other hand, higher wages have the most disincentive because of marginal tax rates (which are the implemention of the Marxist concept of a heavily graduated, "progressive" income tax).

Cut taxes for the typical American worker, and he might produce a little for the little in tax breaks. Cut taxes for the upper incomes, and they'll produce a lot for it, because it's already their nature to produce a lot. Also, contrary to what Democrats would have you believe, the money is never hoarded by the rich: one way or another, it circulates back into the economy. A middle-class family might curse a CEO's big tax break, but whose money do they think they're borrowing for a mortgage or auto loan? Also, a tax cut for a family might reduce their burden by $1000 and give them an incentive to earn $5000 more, but how about a tax cut for an executive who'll negotiate one more deal, creating more jobs in the end, and earning a fat bonus for himself that will go right back into the economy?

Our friend jk at Three Sources noted last month that a fundamental problem with modern liberals is their belief in zero-sum economics. They maintain that someone "wins" only when someone loses, so according to them, someone becomes wealthier at the expense of others, who become poorer. Nothing could be further from reality: if liberals were right, then economies would never expand beyond inflation plus population growth. However, the most important factor in economic expansion is productivity, and just because one person is more productive, i.e. just because one person produces more, it does not follow that everyone else becomes less productive.

It makes no difference to me whether Bill Gates (well, Steve Ballmer now) earned $x or twice that last year, when I by comparison made but a fraction of that. Money at any given point in time is finite, but there are no restrictions on people's ability to create additional wealth. In fact, it makes no difference to my salary how much the CEO makes where I work. People tend to believe the myth that if only top management were paid less, that money could be "spread around" -- distributed to the lower workers. It's a myth because if the CEO is paid $10 million annually, $20 million or $100 million, I would still be paid the same. That's because we each produce a certain amount of value for the firm, and it's willing to pay each of us that much. It is not going to pay me more to produce less, but it will certainly offer a big package to someone who knows how to run the company.

Morgan Stanley wouldn't have offered John Mack $25 million a year if they didn't think he was worth more than that to the company. It could have offered a mere $1 million a year to and attracted a mid-tier financial sector executive, who in the end might have saved Morgan Stanley $5 million a year. But that salary would never have attracted a top-notch executive with the potential to turn a company around, saving and producing many times more than his salary. The lesson, then, is that when companies pay certain employees much more, that's because those employees produce more than what they're paid, and the higher pay never detracts from wages on the lower end of the pay scale.

Let's talk further about producing more. Pelosi talks about rewarding wealth instead of work, which is more bullshit. What she and other liberals just won't acknowledge is that it's not a matter of working hard, but working smart. The capitalist system rewards production, whether you're a manual laborer or a CEO keeping everything together. You can sweat 12 hours a day digging ditches, but though it's physically hard work, that's not as valuable, by any measure, as top management work.

"But at least laborers work hard," liberals retort. And those of us who use pens and keyboards, and have hour-long conference calls hoping we can fix the latest crisis and keep our jobs, don't work hard? I don't mean to denigrate the new mailroom guy, but there's a reason I'm paid more than him. Is that "fair"? Absolutely. It would be unfair if we were paid the same: while he delivers mail, I investigate possible employee trading violations and field questions on compliance rules. We're both working, but Pelosi probably will never understand why one is valued more, why one is rewarded more than the other.

Mitch McConnell had a good response, if a pithy one, but he could have gone further. He could have said we've had several decades of tax hikes and tax cuts to prove that supply-side economics is reality. (By the way, Brad, I started reading the post you linked to, but I haven't had time to address it. No offense, but you appear to misunderstand what the Laffer Curve is really about, and I suspect because you've heard too much liberal mythology about it.) Coolidge, Kennedy, Reagan and GWB cut taxes significantly, resulting in economic growth plus more revenue than before. On the other hand, Hoover and FDR, George H.W. Bush and Bill Clinton all raised taxes. The 1990s tax hikes failed to generate the promised revenue, and though Hoover and FDR did succeed in raising more revenue, they exacerbated the Depression by trying to tax the nation to prosperity.

Unlike cutting taxes to give people a reason to create more wealth, raising taxes is worse than zero-sum because of the disincentive. God knows I have my problems with Republicans, but what am I going to do, help elect Democrats who'll hike the top rate to 50%, give everybody "free" health care, and wreck the nation back to the 1930s? Don't put it past the Democrats to insist that "the rich" can afford a "fair" 50% federal income tax to fund wasteful social programs for the rest of us.

Then again, maybe we do need to elect enough Democrats so that they have a super-majority in both chambers, with Hillary back in the White House (officially president that time). That way, seeing how bad things can get, enough Americans will wake up and take their country back.

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14 Comments:

Anonymous Quincy said...

Right now, the federal government taking away a quarter of my paycheck, the CA government taking away more, and having to pay 8% on top of the price of everything I buy is what's making me poor. In the last two months alone I've had enough withheld to pay for a top of the line Mac! And aside from a top-notch military defense, what exactly have I gotten for that money? The right to pay more than I have to for food because of subsidies paid to farmers not to grow things; money paid to small businesses to counteract the never-ending damages inflicted upon them by government; the knowledge that Congress thinks I am, along with every other normal American, too infantile to responsibly gamble online... Yes, all of these, and the millions of other ways government interferes with my life and yours, are certainly worth... Well, they're certainly worth a helluva lot less than that new MacBook Pro I could be typing on right now.

Saturday, October 07, 2006 4:18:00 AM  
Blogger jk said...

Thanks for the kind words and link.

How can you (and our buddy Josh) be ambivalent about voting when you see the specter of Reps. Pelosi and Rangel getting custom walnut gavels with abalone inlays?

I'm plenty disappointed with 100 things about the GOP, but the Democrats seem worse to me on almost every issue. I may hold my nose a little but I will not consider staying home.

Monday, October 09, 2006 4:46:00 PM  
Anonymous Brad Warbiany said...

Perry,

I look forward to your post on the Laffer Curve. I've never pretended to be an economist, so it's quite possible I'm completely misunderstanding it. But I'd like to think I'm a pretty sharp guy, and there's just something sticking in my brain. If you can tell me where I'm wrong, it would help me greatly :-)

Thursday, October 12, 2006 11:22:00 PM  
Anonymous Anonymous said...

Pelosi is a pre-op transvestite.

Thursday, November 02, 2006 8:30:00 PM  
Anonymous Anonymous said...

Look, you christian fukks! Gays are taking over, see? And there's nothin' you gonna do about it because the fact of the matter is gays outnumber straights. That's right! 10% is a lie fabricated by insecure priests with small penises who like little boys. The reality is that gay people are 85% of the population and only 15% are purely hetero. Suck it, republican beeyotches. We gonna get yo ass.

Thursday, November 09, 2006 9:20:00 PM  
Anonymous Anonymous said...

That's not right. Jesus said that gays must die and all democrats. It says it right in John 32:3 "Thou shall smiteth the blaspheming democrats and their gay-loving ways with flamethrowers and baseball bats." So you can see, my hatred for minorities is supported by the Bible.

Thursday, November 09, 2006 9:22:00 PM  
Anonymous Anonymous said...

Fools! We have killed your innocents and now we have taken control of your democracy which is owned by the republican dictatorship! All arabs care soooo much about America that we will waste our time doing this because we need to stick to the monkey they call Bush because Bush is the almighty and powerful and all arabs care soooooo much about that monkey that our pathetic lives revolve around him just for Bush, because Bush is like Christ and must be destroyed because naturally arabs are evil and they give such a big goddamn fukk what happens in American even though Bahrain is rolling in a gazillion times more money from oil than america has ever known. bwahaha.

Thursday, November 09, 2006 9:29:00 PM  
Anonymous Anonymous said...

have any more republicans come out of the closet this week or revealed their pedophile tendencies? hahaha. bring back clinton. having an adulterous cigar-sex fling is at least interesting to read about, but republican pedophiles are just sick and need to be all shot!!!

Thursday, November 09, 2006 9:31:00 PM  
Anonymous Anonymous said...

Is that George Bush dead yet? Wake me up when the bullet enters his skull. Forget Hussein and Osama. Slice Bush's throat with a blade on national TV.

(Of course, I'm joking because I'd never ever ever encourage presendential murder for the sake of pursuing my own entertainment whatsoever because I'm a good and honorable citizen of the Fascist State of America who loves Bush and his global campaign for terrorism.)

Thursday, November 09, 2006 9:36:00 PM  
Anonymous Anonymous said...

um that's spelled "presidential murder", moron.

Thursday, November 09, 2006 9:38:00 PM  
Anonymous Anonymous said...

Ssssssshhhhhh! Don't spell it out for people! By encouraging proper spelling, you're risking the life of Bush to the hands of terrorists or 99% of American citizens! Don't encourage such things because we would all find it sad if Bush was killed on national TV with a bullet to his head, or maybe a flamethrower burning his body, or possibly Bush being eaten by crocodiles with multiple camera angles. All these myriads of possibilities would be very disappointing to 1% of America and we can't let such things happen nor encourage it.

Thursday, November 09, 2006 9:41:00 PM  
Blogger Perry Eidelbus said...

Whoever you are, I think you've been celebrating since Tuesday with far too great a quantity of mind-altering drugs.

Friday, November 10, 2006 1:03:00 AM  
Anonymous Anonymous said...

OMG, Perry! Yeah, man, so what did you think of the crack party? Good eh? Yeah, it was nice to see you there but, dude, your pupils were getting so dilated it was starting to scare me a little and at one point, you had a little powder on your nose but I didn't know how to break it to you. Sorry, dog.

Friday, November 10, 2006 5:18:00 AM  
Blogger Perry Eidelbus said...

That's "dawg," homes. You need to throw in the accent.

Saturday, November 11, 2006 11:56:00 AM  

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