Another Slice of Pie?

Slate has been running a series about the widening income gap in America. Refreshingly, after almost a century of government policies designed to decrease income inequality, liberals are admitting that these policies do not work. Still, Timothy Noah, the series’ author, cannot resist using the language of class warfare to decry the evils of American capitalism. White-collar office jobs are bad, but unionized blue-collar jobs are good. One quote is particularly telling:

The top was occupied by a group that Clinton's first labor secretary, Robert Reich, labeled "symbolic analyst." These were people who "simplify reality into abstract images that can be rearranged, juggled, or experimented with" using "mathematical algorithms, legal arguments, financial gimmicks, scientific principles, psychological insights," and other tools seldom acquired without a college or graduate degree. At the bottom were providers of "in-person services" like waitressing, home health care, and security. The middle, once occupied by factory workers, stenographers, and other moderately skilled laborers, was disappearing fast.

What about plumbers, electricians, auto mechanics, steamfitters, carpenters, train conductors, and all of the other blue-collar trades? These are respectable jobs with good pay and strong growth potential. As long as there are people, these moderately skilled jobs will always be in demand. These jobs are manually intensive so they cannot be automated, and they cannot be outsourced because they depend on a local workforce. The theory advocated by Mr. Noah seems to ignore this segment of the economy.

For insight into how Noah manipulates the data to feed his storyline of the downtrodden proletariat, notice that his analysis relies entirely on the share of aggregate income statistics from the Census. According to these figures, the share of aggregate income for all but the top 20% has decreased. However, at the same time, the economy has also grown. It's not as if millionaires are fighting with the homeless for a slice of a never-changing pie.

If we look at the actual household income figures, we see that all quintiles, even the lowest, saw an increase in income in inflation-adjusted terms. The reason the top quintile has grown more than the others is because the rich are the ones who generate growth in the economy. You don't see very many bums opening factories, shopping malls, or office parks. Contrary to Mr. Noah's polemic about the inherent evils of capitalism, if you take away money from the rich in the pursuit of “equality,” you will only slow economic growth for all.

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Colonization: An Alternative History

What if we lived in an alternate universe in which the United States colonized Britain? The map below shows real place names in England and Wales, but labeled as if they were named after their American counterparts, instead of vice-versa.

If you have any other suggestions, add them in the comments!

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The Rise of Hoover-Carterism

Remember when President Obama was popular? Last year, when the media was spreading stimulus propaganda, the meme was "worst downturn since the great depression." As an incredible testament to the power of groupthink, that exact phrase returns more than 700,000 results on google.

Of course, when Obama enjoyed high approval numbers, the "worst downturn" trope was a good thing! By trumping up the scale of the disaster, liberal media types thought they were giving support to the argument at the time that Obama, in his exalted greatness, was going to rescue us all like F.D.R. supposedly did back in the '30's.

But now Obama is not popular. Instead of being "somebody else's mess" that Obama was going to clean up, the "worst downturn" is becoming a real political liability for the current administration. Even more tellingly, comparisons of Obama to Herbert Hoover and Jimmy Carter are becoming more frequent.  As Niles Gardinier put it in the Telegraph the other day:

In contrast to the soaring rhetoric of his 2004 Convention speech in Boston which succeeded in impressing millions of television viewers at the time, America is no longer inspired by Barack Obama’s flat, monotonous and often dull presidential speeches and statements delivered via teleprompter. From his extraordinarily uninspiring Afghanistan speech at West Point to his flat State of the Union address, President Obama has failed to touch the heart of America. Even Jimmy Carter was more moving.

Like a motorcycle daredevil, Obama promised us he could jump the moon only to crash and burn. Unlike the fickle opinions of media elites, the immutable laws of gravity--and of economics--are not swayed by flashy self-promotion and arrogant bravado. As a symptom of this, the New York Times includes this hilarious quote in an article about the dismal condition of the economy:

Mr. Herzon said that he was not expecting a double-dip back into recession, however. “It’s difficult to point to a shock that would be bad enough to put the economy back into a recession,” he said. “I just think it means that this recovery is going to be slower and more painful than we originally expected.”

In the words of Tanto, "Who do you mean 'we,' kemo sabe?" How could anyone have honestly expected to go from the "worst downturn since the great depression" to the "summer of recovery" within a year or even two years? The media's unaccountable optimism that massive Keynesian spending, increased regulation, higher taxes, and crippling uncertainty in the marketplace would somehow produce different results this time around is only matched by Obama's own audacity and self-regard. As Adam Smith wrote:

The uniform, constant, and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things towards improvement, in spite both of the extravagance of government, and of the greatest errors of administration. Like the unknown principle of animal life, it frequently restores health and vigour to the constitution, in spite not only of the disease, but of the absurd prescriptions of the doctor.

Ironically, Adam Smith's medical metaphor is especially apt when we consider that Obama's blind and irrational obsession with health care reform has done more harm to the economy than his inaction with regard to tax cuts. Like Adam Smith's quack doctor, Obama has given our economy a medical treatment far worse and more damaging than the disease it was meant to cure. We can only hope that Dr. Obama's euthusiasm for snake oil and liver pills does not kill the patient entirely before it has a chance to recover on its own.

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Guest Posts

The Prolix Patriot is featured today at the Washington Examiner and at the American Principles Project.  Check them out and show your support!

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"Drain the Swamp"

A view of the House chamber during recess.

A month before Democrats took control of Congress in 2006, then-Minority Leader Nancy Pelosi famously declared that it was time to "drain the swamp." The Democrats' November victory that year was widely seen as a public repudiation of Republican abuses, especially Abramoff's web of corruption.

As a result of widespread scandals, four Republicans--Tom DeLay, Duke Cunningham, Bob Ney, and Mark Foley--were forced out of office and two spent time in jail. Meanwhile, Harry Reid and Patrick Kennedy are still in office despite being caught in their own scandals in 2006.

Today, Democrats Charlie Rangel and Maxine Waters are in big trouble over ethics violations, John Kerry is in the news for evading Massachusetts sales and property taxes, and Al Gore is seeking a divorce amid accusations of sexual misconduct. Plus ça change! At least in 2006, none of the public figures embroiled in scandal were former Presidential candidates.

Nevertheless, today's New York Times explains this all away as nothing more than "a heightened sensitivity in Washington to indiscretions by members of Congress." The Times goes on to explain Rangel’s particular "indiscretions:"

...there was an unusually close overlap, the committee contended, between appeals for donations and his intervention on legislative matters, citing in particular a meeting Mr. Rangel held in 2007 at a New York hotel with an executive from an oil drilling company at which he made a bid for a donation and also discussed a tax break the company was seeking.

The executive, Eugene Isenberg, and his company ended up making a $1 million contribution to the educational center, and Mr. Rangel helped the company secure a tax break worth an estimated $500 million.

In addition to soliciting contributions for an educational institution bearing his name, Rangel also failed to report hundreds of thousands of dollars of income in Congressional disclosure forms and did not pay any taxes on rental income from his Dominican villa until 2008, after his misconduct had already been made public. Rangel's former Republican colleagues went to jail for similar "indiscretions."

In light of these scandals, Speaker Pelosi seems to have failed on her promise to create the "most ethical Congress in history." It's enough to make one wonder whether Democrats and the liberal press used ethics as a prop for temporary political advantage back in 2006. But lest we jump to any conclusions, Pelosi explained last week that she only meant to drain the Republican side of the swamp. We'll see if voters buy it in November.

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Moratorium on Brains

President Obama waving goodbye to American jobs

The Washington Post reports today that Obama’s deep-water drilling moratorium is creating plenty of new jobs--in Egypt, and elsewhere abroad:

This month, Diamond Offshore Drilling announced that it is sending one of its deep-water drilling rigs from the Gulf of Mexico to Egypt. The rig, which can work in water up to 10,000 feet deep, has a new contract running at least through June 2011. On Monday, Diamond said another Gulf of Mexico rig called the Ocean Confidence would depart for Congo.

Diamond said it might move more of its three remaining Gulf of Mexico rigs to foreign countries. While apologizing for the loss of jobs in the United States, Diamond chief executive Larry Dickerson said, "We are actively seeking international opportunities to keep our rigs fully employed."

That should help jump-start the ailing economy!

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The Irish Grasshopper

Today's New York Times reports on a new kind of "troubles" in Ireland. After more than a decade of capitalizing on cheap labor and goods in the expensive Euro-zone, Ireland has fallen harder than most in the global downturn. The same forces that propelled Ireland's economy forward before the crash have now driven unemployment above 13%. Trapped by the Euro, Ireland cannot now devalue their currency to boost economic growth.

Despite this, the Times portrays Ireland's economic troubles as the tragic consequence of so-called austerity measures that were enacted in 2008 to prevent Ireland's government from defaulting. Sticking with the liberal playbook, the Times trumpets Keynesian stimuli enacted by other countries while lamenting that Ireland couldn't afford to save jobs with a stimulus of their own. This is preposterous: raising taxes while Ireland's economy was going down the toilet is the source of their trouble, not a lack of stimulus.

To wit, we have seen that the Democrats' massive $800 billion Keynesian "stimulus" package has done nothing to slow the loss of jobs here in America. After passage of the bill in February of 2009, the US unemployment rate continued to rise, spiking at 10.6% in January of this year. At 9.3%, it is still higher than it was then. Worse still, jobs "created or saved" by the stimulus—if not outright fabrications—are at best only temporary. Unless the private sector starts creating new jobs—which it has not—unemployment will spike again.

The real problem with Ireland's austerity is that, like all of Europe, they waited until after the crisis to address outrageous deficits and runaway spending. Like the grasshopper of fable, Ireland and the rest of Europe danced in the summertime, blithely spending money they didn't have to fund an ever-increasing entitlement state. Now, Europe's welfare bomb has exploded, and it can't be put together again. America still has hope of avoiding the same fate, but we must learn to save when times are good.

The Obama Administration has created vast new spending programs that will not take full effect for several years, and while repealing ObamaCare is a good start, it will take much more to put America back in the black. Politicians hate cutting spending; more so when revenues are high, but when the economy eventually recovers, we must remember this moment. If we do not reduce spending when times are good, we too will end up like the grasshopper, dying in the cold.

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