FUNDAMENTAL TRUTH #55: “Liberals are all for trickle-down economics as long as the wealth trickles down from those who support liberals.” -Old Pithy

Posted by PITHOCRATES - March 1st, 2011

 Under Carter it was ‘in Government we Trust’

Mention Ronald Reagan in a room full of liberals and no doubt you’ll hear some derisive comment about trickle-down economics.  You see, liberals don’t like Reagan.  They liked Jimmy Carter.  But hated Ronald Reagan.  Because Reagan dared to say the king was wearing no clothes.  Metaphorically, of course.  But not Carter.  He clung onto the illusion of Big Government as the people’s savior.  Though a practicing Baptist, for Carter it was ‘in government we trust’.

Carter was a one term president.  Liberals may have liked him but the rest of the country didn’t.  Granted, he came into office with some pretty bad economic problems.  He can thank LBJ‘s Great Society for that.  The greatest explosion of government spending since FDR‘s New Deal.  And then Nixon decoupling the dollar from gold didn’t help.  The left doesn’t much care for Nixon, either.  Which is funny.  Because he governed as a liberal.  He spent money and grew government.  And when he decoupled the dollar from gold he called himself a Keynesian (i.e., a Big Government guy when it came to economics).  Carter’s misfortune was to follow all of this financial devastation.  Well, that, and the fact he didn’t have a clue about how to fix things.

Reagan did.  “Government isn’t the solution to our problems, government is the problem,” Reagan said in 1981.  And the warning Klaxons went off throughout liberal-land.   There was imminent danger.  And his name was Ronald Reagan.  You see, Carter did all the right things.  For those on the left.  And what did he get?  High inflation.  High interest rates.  And high unemployment.  They measured the economy with the misery index as we wallowed through the stagflation of the Carter years.  During the 1980 presidential campaign, Reagan asked the simple question heard round the world.  Are you better off now than you were 4 years ago?  Reagan went on to win the election.  So the answer was ‘no’.

Reagan Fixed the Economy and Fired Air Traffic Controllers

Reagan cut tax rates.  And the economy eventually exploded.  We said goodbye to stagflation.  And the misery index.  They were relics of the Carter years.  It was a new morning in America.  People had jobs.  They were happy.  Optimistic.  And this infuriated liberals.  Because Reagan’s conservatism flew into the face of everything they held dear.  And then came PATCO

The Professional Air Traffic Controllers Organization.  A federal government union.  They went on strike in 1981.  Which was against the law.  Government unions could not go on strike.  The strike shut down much of air traffic in the U.S.  This was big.  No business travel.  No sports travel.  No vacations.  No mail.  A small group of some 11,000 controllers shut down air travel.  And greatly disrupted the economy.  Reagan ordered them back to work per the law.  They refused.  He fired them.  And the left howled.

So you can see why liberals hate Reagan.  He was a destroyer and debunker of liberalism.  And the people loved him.  He won reelection with 49 states.  The man was more popular than sliced bread.  Worse, people were happy.  Whistling a happy tune while they went on their merry way.  Which is all well and good if you’re one of the ones whistling.  But when you’re part of that tiny 20% of the population that wants to run the other 80%, there was nothing to whistle about.  Reagan had become liberal enemy number one.

Reaganomics Replaces Failed Keynesian Economic Policies

So they attacked.  Then.  And now.  And they zero in on those tax rate cuts.  Sure, they say, the tax cuts stimulated the economy, but at what cost?  Huge deficits and a skyrocketing debt.  This, of course, is not true.  The cuts in the tax rates nearly doubled tax receipts.  The Democrat House (Tip O’Neil and his fellow Democrats had the power of the purse) just went on a spending spree with all that cash pouring into Washington.  Remember, all spending bills originate in the House of Representatives.  Defense.  Entitlements.  And all discretionary spending.  And when tax receipts nearly doubled with cuts in the tax rates, it proved that Reagan was right.  And liberals were wrong.

But they keep repeating the lie.  Hoping that if people hear it enough people will believe it.  Then they move on to trickle-down economics.  Supply-side economics.  Reaganomics.  They love to disparage this term.  Despite the fact that under Reaganomics, the 1980s was one of the most prosperous periods in American history.  So what is supply-side economics?  Well, think of it this way.  When do you live better?  When you have a job?  Or don’t have a job?  It’s pretty hard to pay your bills if you don’t have a job.  You can’t buy gasoline.  Food.  Clothes.  Electronic toys.  Etc.  So I think most will agree that life is better when we have a job.  And where do jobs come from?  From businesses.  That are pursuing a profit.  If they can make a profit they expand their businesses.  And hire more people.  Thus creating more jobs.  And this is supply-side economics in a nutshell.  They’re economic policies that are business-friendly to encourage their growth.  So they will hire more people.

Makes sense.  To the sensible.  But not to a liberal.  Because liberals are Keynesians.  They want to redistribute the wealth.  Take money from the rich.  And give it to the poor.  They believe that is how you create economic activity.  By giving other people’s money to other people so they can spend it.  And we tried it.  Under LBJ, Nixon, Ford and Carter.  Didn’t work.  Liberals will blame everything under the sun why it didn’t work.  But never the ideology itself.  Which is flawed.  Because higher taxes reduce profits.  Which hinders business expansion.  Which hinders job creation.  Which hinders economic activity.  And this is exactly what happened under LBJ, Nixon, Ford and Carter.  Which is why Carter was a one term president.

Trickle-Down is Okay as long as it Fills Union Coffers

The funny thing is that the left often supports trickle-down economics.  Whenever they are supporting the UAW.  They support high pay and benefits for unskilled labor on the assembly line.  Because it stimulates the economy. Yes, we pay these people a lot.  But they go out and spend that money.  And that pumps a lot of money into the local economy.  We’ve all heard these arguments.  Whenever liberals are defending high union wages and benefits.  Of course, liberals got so greedy that they killed the golden goose.  Assembly plants left the country.  Robots replaced workers on the line.  The few jobs remaining have nice wage and benefit packages.  But at what cost?  Hundreds of thousands of jobs were lost in the deal.  A terrible cost as jobs drive the economy.  The more the better.  While fewer higher-paid jobs just don’t help anyone but the few who have those jobs.

It’s the same thing with public sector workers.  No one has a better salary and benefit package.  For many it’s like getting two paychecks for one job.  For every dollar in pay they get something like $0.75 in benefits.  Mostly health care and pensions.  Teachers are often some of the greatest beneficiaries when you factor in all the time off they get.  There’s a reason why these public sector workers strike and never quit these ‘horrible’ jobs.  Because they can’t find a better job.  So when states and cities have trouble balancing their budgets because of out of control health care and pension costs they raise taxes.  Make the rest of us live on less.  To save these jobs.  For these good people.  Sure, we pay them a lot.  But they go out and spend that money.  And that pumps a lot of money into the local economy.

So that kind of trickle-down economics is okay.  But Reaganomics was nothing but tax breaks for the rich paid for by the working poor.  While fat union pay and benefits stimulated local economies.  A double standard?  Yes.  But there is a difference.  Trickle-down from job creators doesn’t generate a lot of union dues.  Trickle-down from union workers and the public sector do.  That’s why the liberals support unions.  Because liberals get a lot of that dues money.  And loyal foot soldiers to advance their agenda.

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FUNDAMENTAL TRUTH #52: “The political right is usually right.” -Old Pithy

Posted by PITHOCRATES - February 8th, 2011

Sitting in the French Legislative Assembly and Defining Future Politics

In politics we hear a lot about the Left and the Right.  What does that mean?  Where did these terms come from?  Probably the French Revolution.  So we need a small primer on the French Revolution.  So here goes. 

In late 18th century France, in the Ancien Régime (before the French Revolution), there were three main groups of people.  They called these the estates of the realm.  The First Estate was the clergy of the Catholic Church.  The Second Estate was the nobility (less the king).  And the Third Estate was everyone else (approximately 98% of the population).  The first two estates were exempt from most taxation and lived well and had full bellies.  The Third Estate paid the bulk of taxes, lived horribly and suffered a famine or two.

Well, this caused tensions.  The poor were deplorably poor and hungry.  Compounding this problem was the near constant state of war between France and Great Britain.  That and financing the American Revolution was bankrupting the Ancien Régime.  The régime had nothing to give to the poor and hungry.  So the poor and hungry revolted.  They met in the French Legislative Assembly of 1791 to debate the future of France.  Those in favor of the monarchy and the old order sat on the right.  The radicals who wanted to overthrow the old order sat on the left.

Right and Left become Conservative and Liberal

So that’s a brief lesson on the origins of the political labels ‘Left’ and ‘Right’.  They weren’t political parties.  They were just seating arrangements.  In those days, the Left were liberals.  Similar to our Founding Fathers.  In the classical sense of liberalism (it meant something completely different then than it does today).  Basically, the Left said the old ways just ain’t working anymore and it’s time to try something new.  The Right, on the other hand, was worried about losing their privileges.  As well as the potential chaos that could result from trying something new.  And for good reason.  The French Revolution got a little chaotic.  And a little bloody.

Since then the labels kind of morphed into new meanings.  Right and Left have become synonymous with conservatism and liberalism (or Progressivism, Socialism, Communism, Marxism, etc.).  Conservatives (the Right) believe in individual liberty, limited government, laissez-faire capitalism, low taxes, free trade, little business regulation, etc.  Liberals (the Left) believe in Big Government to redistribute the wealth, high taxes, strict controls on capitalism and business, oppose free trade and believes business operates best (and most fair) when ‘partnered’ with government.

So, to simplify, on the right you will find capitalists.  On the left you will find anti-capitalists.  On the right, people decide what’s best.  On the left, government decides what’s best.  On the right you keep more of your paycheck and buy what you want.  On the left you keep less of your paycheck so others can buy what they want.  And so on.

Free Markets and Planned Markets

The Right believes in free markets.  That if left alone, free markets will maximize employment and living standards.  The Right doesn’t believe that any one person is smarter than the collective of millions of individual decision makers in the free market.  The free market is always win-win.  When two people agree on an economic decision, they both prosper.  The seller gets what they value more (money).  And the buyer gets what they value more (what they bought).  When everyone is choosing what they value most in the free market, economic activity explodes.  This creates jobs.  Workers earn money to buy goods and services.  And taxes at low tax rates paid by the multitude of businesses and individuals swell the public treasury.

The Left, on the other hand, believe a free market economy is inefficient.  They prefer a planned economy.  They want to mettle.  To tinker.  To help people make economic decisions by regulating markets.  Enacting targeting taxing and targeting tax cuts.  To make us buy what they think we should buy (electric cars, for example).  And they think free markets are woefully unfair.  Because poor people can’t buy as much as rich people.  So they want to tax the rich to redistribute their wealth to the poor.  They call this stimulative.  Giving away other people’s money.  So other people can spend that money.  (So if you’re keeping score, net spending doesn’t change.  Just who is spending the money changes).

There’s a lot more to these political labels Left and Right.  But this will suffice for our purposes.  You will see more mature and elderly people on the right.  And more younger people on the left.  Remember the expression from the hippy counter-culture in the Sixties?  Never trust anyone over thirty?   You know who was saying this?  Inexperienced and ignorant young people.  Young college students who learned a thing or two from a radical professor.  You didn’t see many family breadwinners in the counter-culture movement.  Just a lot of people who hadn’t grown up yet or worked a job or raised a family.

Age, Experience and Family tend to make you Conservative

And so it is today.  The Left depends on the young.  That’s why they lowered the voting age to 18.  To get these people who haven’t experienced the real world yet to support things that sound good.  Yes, we should pay more taxes for a better education.  Of course, what the young don’t know is that they’ve been saying this for the last 50 years or so.  And the quality of our education has gotten worse.  Not better.  That’s why the older and more experienced voter tends to vote against these tax increases.  Not because they hate kids.  But because they’ve seen throughout their life that throwing money at education hasn’t helped any student.  Only the public school bureaucracy.

When you’re young and stupid you tend to think about today.  Your emotions easily sway you.  And your passions.  Your thoughts focus on having fun in the sun.  Going to a club.  Dating.  It’s a little different when you have a family.  You think about other things then.  Your kids’ school.  Paying a mortgage.  Putting money aside for your kids’ college education.  Putting money aside for your retirement.  Those kinds of things.  And, incidentally, those things require a good-paying job.  And tax rates that aren’t so onerous that you can’t afford those things you want for your family.

That’s why we call these people on the right conservative.  They’re not too keen on change.  Because they have a lot of responsibilities.  And they’ve made commitments to meet those responsibilities.  It’s one thing to be footloose and fancy free and have radical thoughts.  I mean, what have you to lose?  But it’s quite another thing when you do have something to lose.  Any by that time in your life, when you’re making a pretty good living, you’re paying quite a bit in taxes.  Unlike those young radicals.  You have skin in the game.  They don’t.  They are, in fact, gambling with your money.  Those radical changes (health care for everyone, taxing the ‘rich’, carbon taxes to end global warming, etc.) they’re fighting for won’t impact their lives much.  They’re not paying the taxes.  Yet.  You are.  But those things will impact your life.  So much so that they may alter your life.  You may have to make a choice between a college education for your kids.  Or a comfortable retirement.

Radicals tend to Live in the Heat of the Moment while Conservatives look beyond the Moment

Part of the reason those on the right stood with their king in France was that they saw the danger in radical change.  The breakdown of institutions.   Of tradition.  Things that they knew worked.  Things that made France a great empire.  There may have been problems.  Some inequities.  But the collapse of the old regime may unleash chaos and violence.  Back then, that’s how power changed.  Through chaos and violence.  And sometimes an imperfect system is better than chaos and violence.

Over in America, a group of liberal radicals led their revolution.  But once they won their independence from Great Britain they got very conservative indeed.  In fact, they called some of the Founding Fathers ‘too British’.  Washington, Adams, Hamilton, Jay, to name a few, where attacked for letting down the spirit of ’76.  There were still a lot of passions in the states.  Still a bit of a civil war going on in the south between Patriot and Loyalist.  But it was time for the grownups to step in to win the peace.  Even if they were perceived as being too British.

Radicals are quick to point out your failings.  But they don’t often have the wisdom or experience to see the big picture.  They live in the heat of the moment.  And often act bold and impertinently.  Whereas wisdom and experience tend to make you act with restraint.  To be conservative.  To see beyond the moment.  Because some of the established institutions and traditions have worked.  And even have defined a people.

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