Who Cares about Income Inequality?

Conservative, CRDaily, Politics

It is common to hear prominent members of the Left – especially America’s executive, President Obama – discuss income inequality as if it were a dire, undesirable consequence of “unfettered capitalism,” capable of creating an environment in which the likes of Bill Gates stomp all over the poor and hoard all their extra dollars in some gargoyle-ridden castle in Vermont. They seem, unwisely, to see the American economy as a vast book with a limited number of pages – pages that increasingly belong to a dominant class of entrepreneurs, capitalists, and moguls whose interests are contrary to the public good. But, as I hope to briefly indicate, they also profoundly fail to take into account both the benefits of having wildly rich actors in a capital-based economy as well as the actual, economic conditions of poor people who live in unequal, but rich societies.

Firstly, it is critical to understand that capitalism, to be successful, requires the employment of capital for productive uses: On a microeconomic level, Joe wants to start, say, a local grocery store, so he constructs a business plan, acquires a loan from a bank, and uses it to purchase the necessary starting points that will establish an enterprise hopefully capable of creating jobs and becoming profitable. (This also constitutes an important inefficacy of socialism, but that’s not for this article to detail; see the writing of Ludwig von Mises, or Kevin Williamson’s very useful simplification of Mises’ theory). In order for the sort of activity in which Joe is engaging to occur thousands and thousands of times over, it is certainly useful to have large amounts of concentrated wealth – in billion-dollar banks, in individuals whose profit motive is likely to lead to the creation of innovative companies like Apple and Facebook. When you don’t have those wealthy capitalists or those “faceless” and expansive banks (to whom liberals also levy much undue criticism), the accruing of capital for economic purposes can be difficult and much less common. This, indeed, is not even to mention that the progressive idea which seemingly envisions rich people as draconian money-hoarders is completely devoid of sense, especially considering how difficult it would be to stuff a billion dollars under a bed. The reality that they miss is crucial: Dollars, whether they are stored in banks that then make loans or invested in corporations that create jobs, are useful, even in the hands of vast billionaires.

Regarding the nature of the poor in wealthy but unequal societies, it is worthwhile to consider the assertion that the sorts of economic conditions and institutions which tend to create a slew of really rich people are the same sorts of conditions which make the poor increasingly better off. Allowing capitalism to do its work generally entails the private market’s realization of profitable, technological innovation – not just in distributing resources more efficiently and cheaply, but also in providing goods to the marketplace that are consistently more advanced than whatever came before them. In the end, the environment becomes one in which the phones that billionaires had in the eighties are Paleolithic compared with those that lower-middle-class and even poor people use today; the iPhones of the twenty-first century, in like fashion, are getting cheaper and cheaper as the forces of competition urge Apple to continue to create better products. Charity, too, is a much more fluid and active entity in a nation enjoying rampant economic growth – a nation in which it is actually fashionable to engage in non-profit work and other forms of giving back – than in one that is struggling to establish the institutional roots of a sound economy.

The GINI index is a statistical measurement of the level of inequality within a particular nation, 0 implying perfect equality and 100 implying perfect inequality – analysts generally hoping to see mid-to-low scores as an indication of preferential levels of economic dispersion. If you look, however, at some of the nations that have “good” GINI index scores versus those with high scores, you cannot help but wonder whether or not this type of analysis is useful in measuring economic health: While (in 2010), the United States had a score of 41.1, Ukraine had a score of 24.8; while Israel had a score of 42.8, Slovenia had one of 24.9. Of course, there are a plethora of additional factors to consider when evaluating the health of these economies, but the prevailing consideration seems to me to be that their levels of inequality reveal little about their overall economic quality.

In short, the activists who incessantly scream about income inequality, big banks, and immoral businessmen are generally looking unintelligently at economic theory and data. When thinking rationally about the benefits of having large amounts of wealthy actors, the egalitarian ideal of the Left once again shows itself to be a poorly considered and philosophically adverse prescription for society. Conservatives and the Republican Party properly understand that income inequality is not a pernicious development, but rather one byproduct of a well-functioning, capitalistic economy in which funds are effectively and productively assembled and smart industrialists are able to enjoy the fruits of their innovative behavior.

The Defense of Jimmy Carter

Politics

Why it’s time to appreciate Carter’s presidency

Jimmy Carter Cartoon 001

Cartoon courtesy of Ngozika A. Nwoko

When you think of Jimmy Carter, what are the first words you think of? Are they strong, courageous and independent? Chances are probably not.

When it comes to thinking about the man from Plains, Ga., a majority of people wouldn’t use any of those words to describe his time as President. They may use those words when talking about Carter’s humanitarian efforts with organizations like Habitat for Humanity, but when it comes to his presidency, it would be safe to say that the national attitude is negative. Most people, especially conservatives, feel Carter failed to deal with the international and economic woes of the 1970s, and it was up to his successor, Ronald Reagan, to lead America to greatness once again.

But are these feelings towards Carter fair? Granted, there were problems that arose during Carter’s time in office, but that does not mean we should dismiss his presidency as four years America will not get back. In fact, Carter did a tremendous amount of work that often gets overlooked.

Carter working at his desk. Photo courtesy of the National Archives and Records Administration.

When it comes to economics, Carter faced an economy weighed down by inflation, high unemployment and an energy crisis. Some would say it wasn’t until Reagan that these problems were fixed and the economy began to roar, but without Carter, the booming economy of the 1980s would not have been possible.

As shocking as it may sound, the Carter administration was a leader in deregulation. While these efforts were not perfect, they did help lay the groundwork for a stronger economy while also transforming the luxuries of the 1970s into some of the common services we use today.

When it came to the travel industry, Carter led the deregulation of the airline industry, which resulted in making flying a normal method of travel instead of a luxury for a selected few. As a result, airfares fell nearly 40 percent between 1980 and 1996.

Later in his term, he even started to deregulate the trucking and railroad industries. Even though the plan was started, it eventually was delayed then dismantled by Reagan to fulfill a promise he made with the Teamster’s Union in return for an endorsement.

Carter also helped push the antitrust suit against AT&T, which ultimately led to the breakup of the corporation and the formation of new companies, many of which provided telecommunication services for a cheaper rate. Granted, a better way to have handled this situation would have been, in the words of William L. Anderson of the Mises Institute, to “have deprived AT&T of its legal monopoly status.” Regardless, Carter’s actions without a doubt promoted competition as new phone companies and new jobs were created.

When addressing the energy crisis, it was in fact the Carter administration who laid the groundwork for deregulation of the oil industry. Unlike some Democrats who felt the oil industry should be nationalized, Carter insisted on a gradual decontrol of oil prices. While a step in the right direction, Carter also pushed a tax on oil companies, as he felt that this decontrol would result in higher profits for oil companies who, in his opinion, “really don’t deserve them.”

Despite this blemish, total decontrol was scheduled for spring 1981, but as Reagan entered office, controls were lifted almost immediately, giving Reagan credit for saving the oil industry.

Unfortunately for Carter, inflation rates were high and unemployment rates were at an uncomfortable level (even though unemployment did decrease from 7.5 percent in January 1977 to 5.6 percent by May 1979), making Reaganomics seem like the better option, helping Reagan win the 1980 election and giving the Gipper credit for saving the economy. But in actuality, it was Carter, not Reagan, who helped create economic prosperity, for without Carter’s path of deregulation, recovery would not have been possible to achieve.

Shifting to the subject of foreign affairs, Carter did a great job… minus a certain hostage situation that will be discussed later. The Carter administration managed to do the impossible by not only strengthen in the United States’ standing abroad, but also promoting diplomacy through the least violent means possible.

Highlights include improving diplomatic relations with China by officially transferring diplomatic recognition from Taiwan to the mainland, opening the door for the current diplomatic relationship we have with the nation today. The administration also returned the Panama Canal to Panama, which removed part of America’s overbearing presence from Latin America, possibly preventing a Vietnam War-like scenario. It was Carter himself who helped broker Israeli-Egyptian peace with the Camp David Accords.

File:Camp David, Menachem Begin, Anwar Sadat, 1978.jpg

Israeli Prime Minister Menachem Begin and Egyptian President Anwar Sadat with Carter at Camp David in 1978. Photo courtesy of the United States Government.

Yet while Carter and his team were improving America’s standing abroad, there was one nation that remained a burr in America’s backside: the Soviet Union

Carter’s plan for dealing was the Soviets was unique, being simultaneously peaceful and threatening. On one hand, Carter supported the SALT II treaty, which would have curtailed the manufacturing of nuclear weapons (it ended up not ratified by the Congress). On the other hand, Carter also proposed the development of 200 missiles to counter an uncontrolled build-up by the Soviets. Yet, the most threatening thing Carter ever did was boycott the 1980 Olympic Games in Moscow as a protest against the Soviet invasion of Afghanistan. While some may scorn him for ruining many athletes’ only chance for Olympic gold, it was a very interesting yet nonviolent strategy for dealing with a bully.

In fact, Carter kept the nation at peace and is one of the few presidents who never led America to war. While some may see that as weakness, it should be seen as a strength. Being able to sit down and talk about your issues or refusing to associate yourself with unethical individuals takes a fair amount of patience, especially if you want to make an important statement . In this aspect, Carter should be praised for his diplomacy and should be a shining example of how a president should handle foreign affairs.

Finally, Carter most certainly had a positive persona to him. He didn’t come off as a typical politician, but instead someone who would be willing to risk even his own standing if it was for the benefit of the greater good.

An early example of this would be a May 4, 1974 speech Carter gave at the University of Georgia while he was serving as governor of the Peach State. In attendance of this speech were numerous state legislative members, judges and then-Massachusetts Senator Ted Kennedy, who was speculated to be a serious contender in the 1976 Presidential election.

The race at the time had no frontrunner, and during a period where Americans’ trust towards the government was quickly deteriorating due to Watergate, there was a need for someone to come out and advocate for change in the political system. No one knew who or how it was going to happen, but something needed to change.

Once Carter opened his mouth, everything did in fact changed.

Carter used this speech to address the various defects of both the Georgia judicial system and the American political system. Unlike many politicians before him, Carter pointed out the system he was a part of was not based in equality, but instead protecting the rich and powerful.

“In general, the powerful and the influential in our society shape the laws and have a great influence on the legislature or the Congress,” Carter said. “This creates a reluctance to change because the powerful and the influential have carved out for themselves or have inherited a privileged position in society, of wealth or social prominence or higher education or opportunity for the future.”

While reflecting on the speech many years later, Carter remarked that reaction of the crowd was “one of stunned silence.” No one in the room knew how to react to Carter’s speech, yet that’s what made it fantastic. It was something so different from the prominent political culture, it ended up being the moment that caught people’s attention and later propelled Carter to the national political stage. He even received endorsements from cultural icons like Dr. Hunter S. Thompson and the Macon, Ga.-based Allman Brothers Band.

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Carter with the Allman Brothers Band in 1975. Photo courtesy of Gregg Allman and William Morrow.

With all of this evidence supporting Carter’s time as president, does that mean he deserves to be considered as one of the best presidents of all time? Not in the slightest.

While Carter did have his great moments, some of his actions while president are some of the worst actions made by a president in recent history.

In terms of bureaucratic power, Carter gave the federal government more responsibilities and even more control over our lives. He was instrumental in the creation of the Department of Energy and the Department of Education. While both departments seem like good ideas on paper, neither has done anything but waste our tax dollars, placing the federal government in an area they had no purpose being in in the first place.

In terms of foreign policy, his most known escapade was his shoddy handling of the Iran Hostage Crisis. After Iranian students overran the American embassy, seizing more than 60 Americans, Carter went through multiple plans to get these Americans free. This includes economic sanctions and a poorly executed rescue operation, neither of which worked. Eventually, Carter did negotiate a deal with the Iranians, but it took 444 days for that deal to be met, making the United States look weak not only in front of a global audience, but also the Soviet Union.

Even Carter’s persona was starting to get on everyone’s nerves. His efforts to come off as average, which include his 1979 Crisis of Confidence Speech addressing the doubts raised about the nation’s future, came off as unpatriotic to some and ridiculous to others. This speech in addition to the Iran Hostage Crisis, the weak economy, a growth in bureaucracy and Carter’s goofy personal life (including an incident of getting “attacked” by a swamp rabbit while fishing) gave the Reagan-Bush ticket the edge in the 1980 Presidential election.

File:Jimmy Carter in boat chasing away swimming rabbit, Plains, Georgia - 19790420 (rabbit).jpg

The rabbit in question. Photo courtesy of the Jimmy Carter Library

But even with all of that, it doesn’t mean we should dismiss Carter’s presidency as horrible. If it wasn’t for Carter’s economic plan, Reagan would not have had the economy he did while president. If it wasn’t for Carter’s diplomatic abilities, the world would have been a less safe place to live. If it wasn’t for Carter’s personality, we would not have had anyone shake the political structure and show us that it was indeed possible to challenge the system

Do I think Carter is one of the greatest presidents of all time? Absolutely not. While his negatives are few, they surely do damage his presidency overall. However, I do not think he deserves the negativity he currently gets. While his accomplishments may not be widely recognized, America could not be what it is today without Jimmy Carter.

Maybe it is time we associate words like strong, courageous and independent with Jimmy Carter’s presidency. It was those traits that made Carter a great president, which as a result made America a great nation.

Obama’s HUDdle on Campus

CRDaily

If you aren’t aware, Obama’s Secretary of Housing and Urban Development, Shaun Donovan, graced our fair campus with his presence this afternoon. According to UNC’s Office of Federal Affairs (did anyone know we even had one of those?), the purpose of the visit was “to provide an opportunity for Carolina stakeholders to engage a member of the Obama Administration and to better understand some of their policies.” Sadly, the event resembled something closer to a campaign event (and a rather poor one at that).

In the Vicinity of Beijing's 4th Ring, or More Properly, What America Should be Shooting For

I think what was most disappointing was simply the quality of the questions students asked during the Q&A. The first one was “In your dealings with President Obama, what have you found to be his best quality?” And it was simply downhill from there. Now, if this man was addressing a group of third graders, that question might have been appropriate (maybe), but among a group of college students and academics it’s simply absurd. Consider the situation. Here you are, a college student (or professor, or whatever), with an opportunity to discuss anything, from the anemic job market, the depressed housing market, a rapidly nuclearizing Iran, a debt-to-GDP ratio north of 100%, or the impeding collapse of the post-World War II world order, and you essentially ask, “Why is the President soooooo awesome?” I think this little episode perfectly encapsulates what is wrong with American higher education today. Instead of thinking critically about events around it, the academy is so radically self-absorbed and out of touch and so obsessed with its own ideology, it’s simply laughable. Is this really all that the best and brightest of North Carolina is capable of? Maybe it was a fluke, or maybe some rogue from Duke snuck in, but it was kind of embarrassing.

Secretary Donovan, when he wasn’t answering inane questions from the audience, also did a fair amount of pontificating. Apparently, the administration is convinced that we can educate ourselves out of this recession. If only we spend (a lot) more on higher education and push as many people as we can through the system, we’ll all be happy again. Color me a skeptic, but the plan he described, where the federal government subsidizes education through new tax credits, etc., guarantees low-interest loans for all comers, and then requires those borrowers to make only bare minimum payments on those loans, seems awfully similar to American housing policy circa 2008 (which incidentally, HUD bears a lot of responsibility for). I suppose if the idea is to create a giant education bubble, such that when it pops, everyone forgets about the housing problem because the education bubble is so much bigger, then this is a great idea. But if the idea is to generate genuine economic growth, this is certainly not the way to go.

And what’s a State of the Union talk without some mention of trains? Aren’t those things amazing? If only we had more of them, those pesky Chinese wouldn’t even be able to touch us. Actually, the best part of the Secretary’s little speech was when he was talking about China’s impressive infrastructure and how the Chinese are just light-years ahead of us in this regard. He clearly has no idea what he’s talking about. If he did know what he was talking about, he would know that, even in the (very crowded and polluted) major cities (i.e. places like Beijing), you can’t drink the tap water or flush toilet paper because the sewer systems are so old and so out of date. He would also know that electricity is also a problem, and that you actually have to buy surge protectors to insulate your electronic goods from regular power surges. Indeed, even China’s much lauded trains aren’t much to write home about. When they’re not falling off bridges, many of China’s trains are (very) overcrowded, smelly, and generally a very hellish experience. And their highway system isn’t anywhere nearly as well developed as ours. Now, don’t get me wrong, China’s quite a charming place, but the U.S. is definitely winning the infrastructure game.

Shiny!

There was also a fair amount of green energy hype. The Secretary informed us that while there might be a few Solyndras along the way (who doesn’t mind a little government corruption after all), we can’t expect the government to make the right choice every time when it comes to deciding which business to support. This, of course, is the whole point! The government can’t make these decisions, because they are infinitely complicated and not something that some bureaucrat hiding in the basement of a federal building can make. Such choices are properly left to the market, which is a better evaluator  of risk and profit than the government will ever be. When the government tries to make these decisions, you end up with Solyndra. Solyndra isn’t merely a side effect of government intervention in the market, it is its natural conclusion.

All in all, this event was pretty disappointing. The questions were childish, and we got the same old, same old from the administration. It’s simply too bad that what could have been a really interesting event on the future direction of the country devolved into a Why Barack Obama is the Greatest Thing Since Baked Bread event.

The Budget Deal

CRDaily

Let me just say that I am extremely underwhelmed by budget deal currently being touted by the GOP establishment. Putting aside the Planned Parenthood issue for a moment, let’s just trace the course of this “deal.” The GOP ran on a platform that promised $100 billion in cuts this year. That promise was swiftly down-graded to a promise to cut $61 billion. Now, just last night, we’re told that the final cut will be $38.5 billion. All the while, Harry Reid and the Democrats praise the deal as historic. That, of course, should set off some warning bells right there. When have the Democrats ever praised a spending cut? They’re happy because the GOP has effectively broken its “pledge” with the American people to take spending seriously.

And it’s not like a $100 billion cut from a federal budget that exceeds $3 trillion was all that big to begin with. Congress has been effectively arguing over pennies for the last few days, and now we’re supposed to congratulate them for cutting 1/3 of the pennies they originally promised to cut? But you can also take a longer view of this. Paul Ryan just proposed a what will likely be a highly controversial budget plan that makes some serious cuts and adjustments to many of the long-term fiscal problems that plague this country. Given the GOP’s rather unimpressive performance on what’s effectively a rounding error in the Ryan plan, I’m not getting my hopes up about this. Ryan’s plan proposes to cut approximately $6.2 trillion over the next ten years. But if the Republicans can’t even hold the line on $100 billion, how can we expect them to hold the line on $6.2 trillion? Rather than being a victory for Boehner and the House Republicans, I think this episode shows that when they’re pushed hard enough, the Republicans cave.

True Confessions of a Coca-Cola Drinker

CRDaily
Coke Bottle

That's right, it's not even diet.

If one reads today’s column in the Daily Tar Heel, you would think that drinking soda is some sort of gross evil. We’re told that foreigners think we’re fat and what we really need is a fat tax and, we should only be allowed to drink water. What’s really ironic is that this column comes from the same author who advocated pot legalization. So, what gives? Clearly this isn’t about my health. What investment does Ms. Dugan have in whether I drink soda or not?

The answer isn’t all together clear. She tries to argue that this fat tax will result in some sort of tax windfall that will alleviate our national debt problem. However, she also clearly demonstrates that she knows nothing about economics. Claiming that we are a cash-strapped economy (with Helicopter Ben printing cash like a madman, a cash-strapped economy we are not) and ignoring the more obvious consequences of discouraging consumption, Ms. Dugan clearly fails to understand the most basic consequences of raising taxes in a recession (or emerging recovery or whatever you want to call it).

Simply put, it’s none of her business what I choose to drink. If I put on 100 pounds because I drink 12 cans of soda everyday, that’s my problem, not hers. What it boils down to is personal responsibility. Ms. Dugan apparently feels like I have none. I, of course, beg to differ. I love drinking Coca-Cola. Ms. Dugan apparently does not. If I try to force her to drink Coca-Cola (i.e. force my personal preferences on her), than I am clearly in the wrong. But if she tries to force her personal preferences on me (i.e. not drinking soda), she sees herself as some sort of moral crusader. This is completely illogical. If she wants to go live her life as a starving, miserable, deprived human being, fine. Just leave me alone.

Victory is Sweet

CRDaily

I woke up this morning, and for some reason the air seemed fresher, the grass greener, the color of the falling leaves more vivid. Lenoir was even serving meatball subs today. And I asked myself, what could possibly make this day even better? And then I remembered the historic victories secured by the Republicans last night, and my day got that much better. It seems that the stock market had the same reaction I did, with both the NASDAQ and DJIA notching two-year highs. And who can blame them? With the complete and utter failure of the Democrats’ agenda over the past two years, it’s nice to know that we’ll finally be getting some new blood come January.

2010 House Results

Beautiful

Surpassing even the 1994 Revolution, last night’s 60+ seat conversion in the House and 6+ conversion in the Senate is a loud and clear message from the American people that the Obama Agenda is not what this country needs nor wants and a return to sanity and clear-thinking is what is desired.

A special shout-out goes to the North Carolina General Assembly, where the GOP picked up not one, but two chambers. With 31 seats in the state senate (a veto-proof majority) and 66+ seats in the state House (depending on the returns in 4 still-outstanding races, also a possible veto-proof majority), conservatism will finally make itself heard in the halls of North Carolina state government, after wandering in the wilderness for over 100 years. That is change I can believe in.

I’ll also give a special shout-out to Bob Etheridge who, when he’s not wandering the streets mugging unsuspecting college students, apparently thinks it’s still Halloween and is pretending to be Al Gore. You sir, do your state, district, and party proud.