The Fallacy of Redistribution

The following is a quote from Thomas Sowell published in the Patriot Post 9/19/12.

The recently discovered tape on which Barack Obama said back in 1998 that he believes in redistribution is not really news. He said the same thing to Joe the Plumber four years ago. But the surfacing of this tape may serve a useful purpose if it gets people to thinking about what the consequences of redistribution are.

Those who talk glibly about redistribution often act as if people are just inert objects that can be placed here and there, like pieces on a chess board, to carry out some grand design. But if human beings have their own responses to government policies, then we cannot blithely assume that government policies will have the effect intended.

The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty. The communist nations were a classic example, but by no means the only example.

In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler's Holocaust in the 1940s.

How can that be? It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth -- and that future wealth is less likely to be produced when people see that it is going to be confiscated. Farmers in the Soviet Union cut back on how much time and effort they invested in growing their crops, when they realized that the government was going to take a big part of the harvest. They slaughtered and ate young farm animals that they would normally keep tending and feeding while raising them to maturity.

People in industry are not inert objects either. Moreover, unlike farmers, industrialists are not tied to the land in a particular country.

Russian aviation pioneer Igor Sikorsky could take his expertise to America and produce his planes and helicopters thousands of miles away from his native land. Financiers are even less tied down, especially today, when vast sums of money can be dispatched electronically to any part of the world.

If confiscatory policies can produce counterproductive repercussions in a dictatorship, they are even harder to carry out in a democracy. A dictatorship can suddenly swoop down and grab whatever it wants. But a democracy must first have public discussions and debates. Those who are targeted for confiscation can see the handwriting on the wall, and act accordingly.

Among the most valuable assets in any nation are the knowledge, skills and productive experience that economists call "human capital." When successful people with much human capital leave the country, either voluntarily or because of hostile governments or hostile mobs whipped up by demagogues exploiting envy, lasting damage can be done to the economy they leave behind.

Fidel Castro's confiscatory policies drove successful Cubans to flee to Florida, often leaving much of their physical wealth behind. But poverty-stricken refugees rose to prosperity again in Florida, while the wealth they left behind in Cuba did not prevent the people there from being poverty stricken under Castro. The lasting wealth the refugees took with them was their human capital.

We have all heard the old saying that giving a man a fish feeds him only for a day, while teaching him to fish feeds him for a lifetime. Redistributionists give him a fish and leave him dependent on the government for more fish in the future.

If the redistributionists were serious, what they would want to distribute is the ability to fish, or to be productive in other ways. Knowledge is one of the few things that can be distributed to people without reducing the amount held by others.

That would better serve the interests of the poor, but it would not serve the interests of politicians who want to exercise power, and to get the votes of people who are dependent on them.

Barack Obama can endlessly proclaim his slogan of "Forward," but what he is proposing is going backwards to policies that have failed repeatedly in countries around the world.

Yet, to many people who cannot be bothered to stop and think, redistribution sounds good.

 

Life’s Changes

Nancy and I are living in a retirement center these days. We see around us trembling hands, stumbling feet, and confused minds. We can see what we will look like in the future. It doesn’t look good, I must admit. Changes come upon us all.
 

But physical changes in our bodies are not all the changes that come upon us. Our society and the social contract we have lived by for decades are changing, too.

 Our American constitutional framework has endured, but our national life has seen regular “surrogates for revolution.” The conflict over slavery shattered the political consensus of the early republic. The Republican Party was established in 1854 by abolitionists bent on changing America from its slave-holding propensities. The Republicans remained firmly in control of our nation politically for 60 years. That form of polity reflected a confident, moralistic Protestantism that saw the emerging American industrial power as a sure sign of divine providence.

But…that form of leadership could not deal with the social challenges of industrial society—labor unrest, mass immigration, and the dislocating effects of urbanization. The crisis of the Great Depression swept it away. By the 1950’s the Republican majorities had evaporated to be replaced by one that had decidedly leaned to the left, and the Democrat Party held the day—manifested in the New Deal of the Franklin Roosevelt administration. A new governing consensus had come into being, which believed that an activist government should lead the way in providing solutions to the economic and social problems facing the nation.

Now, in its turn, we see that the New Deal/Great Society consensus is under a great deal of stress. The global economy has brought changes that have dislocated workers from their jobs. Many middle-class Americans, especially white, high-school educated males, have suffered a significant decline in opportunity and income. Concerns about health, safety, the environment, non-discrimination, and so forth have created a vast regulatory network of government bureaucracy that adds friction to the economic machine. There are fewer young workers to sustain entitlement programs for retirees, making it unlikely that Social Security and Medicare can be sustained without significant changes. The system created by the New Deal consensus seems old, immobile, and unsustainable.

 What’s to become of the United States? I surely don’t know; but one thing is sure—change will occur. TEA Party populism on the right tells us that we cannot continue buying things we cannot pay for, redistributing money we don’t have, and bailing out businesses that fail. Occupy Wall Street populism on the left tells us that we must regain a lot of low-level laboring jobs for our displaced workers. Doubling down on the old New Deal consensus and putting our faith in 2008-style “hope and change” will not work.

 I am also sure that whatever happens to our political society, capitalism will not go away; and neither will the welfare state. Our country needs a unifying social consensus; and, unlikely as it may seem, history is replete with examples in which religion became the common denominator of lasting societies. Will that happen in the United States? Hmmm…we’ll see.

 Some of this post was taken from First Things, October 2012, page 3.

Depending on Dependency

I am sending along in this blog post the complete text of an essay by Thomas Sowell, an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics and writes from a conservative and libertarian perspective. This essay was posted on the Patriot Post today. Today in America, votes are being bought; this is a disgrace that must be avoided!

The theme that most seemed to rouse the enthusiasm of delegates to the Democratic National Convention in Charlotte was that we are all responsible for one another -- and that Republicans don't want to help the poor, the sick and the helpless.

All of us should be on guard against beliefs that flatter ourselves. At the very least, we should check such beliefs against facts.

Yet the notion that people who prefer economic decisions to be made by individuals in the market are not as compassionate as people who prefer those decisions to be made collectively by politicians is seldom even thought of as a belief that should be checked against facts.

Nor is this notion confined to Democrats in America today. Belief in the superior compassion of the political left is a worldwide phenomenon that goes back at least as far as the 18th century. But in all that time, and in all those places, there has been little, if any, effort on the left to check this crucial assumption against facts.

When an empirical study of the actual behavior of American conservatives and liberals was published in 2006, it turned out that conservatives donated a larger amount of money, and a higher percentage of their incomes (which were slightly lower than liberal incomes) to philanthropic activities.

Conservatives also donated more of their time to philanthropic activities and donated far more blood than liberals. What is most remarkable about this study are not just its results. What is even more remarkable is how long it took before anyone even bothered to ask the questions. It was just assumed, for centuries, that the left was more compassionate.

Ronald Reagan donated a higher percentage of his income to charitable activities than did either Franklin D. Roosevelt or Ted Kennedy. Being willing to donate the taxpayers' money is not the same as being willing to put your own money where your mouth is.

Milton Friedman pointed out that the heyday of free market capitalism in the 19th century was a period of an unprecedented rise in philanthropic activity. Going even further back in time, in the 18th century Adam Smith, the patron saint of free market economics, was discovered from records examined after his death to have privately made large charitable donations, far beyond what might have been expected from someone of his income level.

Helping those who have been struck by unforeseeable misfortunes is fundamentally different from making dependency a way of life.

Although the big word on the left is "compassion," the big agenda on the left is dependency. The more people who are dependent on government handouts, the more votes the left can depend on for an ever-expanding welfare state.

Optimistic Republicans who say that widespread unemployment and record numbers of people on food stamps hurt President Obama's reelection chances are overlooking the fact that people who are dependent on government are more likely to vote for politicians who are giving them handouts.

President Franklin D. Roosevelt understood that, back during the Great Depression of the 1930s. He was reelected in a landslide after his first term, during which unemployment was in double digits every single month, and in some months was over 20 percent.

The time is long overdue for optimistic Republicans to understand what FDR understood long ago, and what Barack Obama clearly understands today. Dependency pays off in votes -- unless somebody alerts the taxpayers who get stuck with the bill.

The Obama administration is shamelessly advertising in the media -- whether on billboards or on television -- for people to get on food stamps. Welfare state bureaucrats have been sent into supermarkets to tell shoppers that food stamps are available.

The intelligentsia have for decades been promoting the idea that there should be no stigma to accepting government handouts. Living off the taxpayers is portrayed as a "right" or -- more ponderously -- as part of a "social contract."

You may not recall signing any such contract, but it sounds poetic and high-toned. Moreover, it wins votes among the gullible, and that is the bottom line for welfare state politicians.

 

 

 

 

 

 

 

SWEDEN CONTROLED ENTITLEMENTS—SO CAN WE!

Sweden’s long-time Prime Minister from 1946-1969 has spoken of the entitlement programs of the country in terms of “the discontent of growing expectations.” In other words, as entitlements grow, the demands for more and more money from the government grows even faster.

The Prime Minister’s misgivings turned out to be accurate. The entitlement society is indeed a beast that feeds on itself. From 1959 to 1990 the total tax burden in Sweden grew from a moderate 25.2 percent to 52.3 percent. During the same time, the public sector share of GDP doubled, while private payrolls fell, predictably causing a decline in economic growth. In 1970 Sweden’s growth was second in the world only to Japan’s; in 1990 it was second-lowest in the 34 member countries of the Organization For Economic Co-operation and Development, even as entitlements and the public sector kept growing. Hence, a familiar choice: Either stop spending, or keep borrowing on the backs of future generations.

Sweden found out that a universal welfare state has consequences that run deeper than the economy, and are more difficult to reverse even than a two-decade-long economic disaster. Fundamental structures of civil society wilt when human responsibilities—including those towards future generations—are subsumed under government entitlements (in Sweden, giving to charity, absurdly, came to be considered a lack of solidarity, since it undermined the need for the welfare state); a sense of passivity spreads when people feel that personal happiness or despondency is independent of their own actions. The bureaucratic framework of the welfare state strongly affects the behavior of the electorate--why vote yourself out of a job? All of these factors made the prospects for Sweden to break the vicious spiral bleak indeed.

 So how did it turn out for Sweden? Against all odds, voters defied political expectations. In 1991 they removed the Social Democratic government that was in power and put in place a center-right government that attacked the fundamental problems of the welfare state. Economic monetary reforms and a sensible economy were established.

Sweeping reforms of the social security system were established, allowing individuals to invest part of their social security tax in private funds. These reforms secured the solvency of the system for future generations. Today, more than half of the population has, at some point, actively chosen to participate in the private market (the money for those who choose not to participate goes automatically into a state-run investment fund).

 In addition to the system’s -market-based aspects, it also contains a circuit-breaker that kicks in when the economy is in recession, which in effect means that retirees receive a lower pension in hard times.

 It is not easy to say whether all of this happened because of good political leadership, or if it was a case of popular sentiment forcing politicians to take action. Either way, a retirement reform with clear similarities to the Ryan plan for Medicare stands as the symbol of a remarkable development in a country that only 30 years ago was on the brink of socializing corporate profits so as to continue down the road to ruin. It is all the more remarkable considering that Sweden was the paradigm of a European entitlement society. http://bit.ly/TwVzJS

 Questions we, Americans need to answer are these: Is the federal government supposed to cater to our every need or desire? Does government have the responsibility to redistribute property in accordance with theoretical and arbitrary ideas of fairness, or should it rather concentrate on ensuring that property is earned fairly and in accordance with the rule of law?

 Americans have become increasingly dependent on the government—for jobs, benefits, pensions, and health care. We are dependent on overseas energy and on cheap goods from China. We are dependent on consumer debt issued by a consolidated financial system in which the largest institutions game the financial system in their favor. Thanks to the Federal Reserve, they are allowed to borrow money at almost no interest; and we, the savers, get no interest payments for our investments.

We need to vote this kind of government out of business. But…it will be very hard to vote a give-away party out of power. Many people are surviving because they have government jobs. Who are they to vote their privileges away?!

 

 

 

 

What Does It Mean To Magnify God?

In our evangelical churches, we often hear it said or sung, “We magnify You.” Does that mean that we are making God bigger by anything we are doing? Absolutely not!! God is already as big as he ever was and ever will be. He is not dependent on us to determine his size. When we “magnify” God it only means that we make his image larger in our own understanding—it is his image, not his actual size that is modified by our attitude.

In Luke 7:36-50, we read about a woman whose sin (greater than that of the Pharisee) learned to love God more than the Pharisee. That was because her sin was considered by her peers greater than that of the Pharisee.  So…she probably loved the Savior more than the Pharisee did. But, did that change God? No. He remained the same.

But God does want his image magnified in our minds. He had even left sins of the people who lived before Jesus’ time unpunished so that he could show his mercy, kindness, and grace in an even larger format to those of us who have lived after Jesus. (Rom 3:25-26) The salvation of those who preceded Jesus was based on their faith that the Messiah was coming and their faith that he could atone for their sins (Habakkuk 2:4b). Their faith was pictured in the sacrificial system.

Does the preceding mean that if we sin more, God will be pleased with us more because his image is enlarged more in our minds? ABSOLUTELY NOT! God’s baseline for sin’s punishment was laid out in its entirety long before we were ever created; and it does not change. Our behavior does not have anything to do with God’s mercy. The criteria for his mercy, grace, and salvation was determined long ago; and it remains stable—it is all about our repentance and faith.

That repentance and faith can only be complete when we absolutely die to ourselves. Until that time, our faith must be dependent on our feelings and the blessings that God has given to us. But…when the maturity of faith actually comes, we can have absolute trust and faith even in the face of adversity. But, above all, we do not need to demonstrate our faith by sinning just to “magnify God” in our minds. That will displease God to the max.

Are You Confused About Medicare Cost Claims?

I have spent the better part of the past 5 days trying to understand the difference between the ObamaCare plan for MediCare and the Romney-Ryan plan. I think I have an accurate understanding of this question, now; but I do not recommend that you try this exercise—it is just too complicated for general consumption. Let me explain it to you in simple terms. Both sides in the argument are doing their best to distort the ideas of the other; and neither side is trying to tell the truth about MediCare proposals.

“MediCare, as we know it today” will go away by means of both plans—it has to; because there is just not enough money to keep the plan intact for the future. So…both systems will change the plan; and by both plans, there will be less service. The only question will be, how soon? And what will be the changes?

Under ObamaCare, $716 billion will be taken out of MediCare by cutting payments to providers; no benefits will be decreased; and the money will be put back into MediCare in the form of payments for cancer screening tests, preventive care, and high cost drugs. Ryan’s plan also proposes the same $716 billion in provider cuts. Here is where the Romney and Ryan plans differ: Romney would put the $716 billion back into Medicare to pay for services. In other words, the Romney plan opposes the cuts, while the Ryan plan includes them.

Under the Romney-Ryan plan, the MediCare eligibility age will increase to 67 years by 2034; President Obama is also considering that change. The Romney-Ryan plan will not affect anyone presently above the age of 55.

Under the Ryan plan, which passed the House of Representatives, MediCare recipients would receive “premium support,” which is another way of saying “voucher” to pay for health care of their own choosing. At the present time, the voucher would be worth $11,000/year, because that is the average amount of money MediCare pays for the average Medicare recipient now. As time goes on the voucher value will increase in value based on the increase in the gross domestic product+1% yearly. That amount of money will not completely keep up with the rate of rise in health care costs, because those health care costs are rising faster than that rate. In the future, patients will have to make up the difference between the money provided by the voucher and the charges of the health care provider.

The Romney-Ryan plan would include an option in which the patient could retain traditional MediCare  coverage.

The Republican plan includes higher Medicare premiums for wealthier beneficiaries. And it includes extra government subsidies for lower-income beneficiaries. This is similar to the situation under ObamaCare.

Under the Romney-Ryan plan, seniors will be able to buy additional insurance to offset the increasing cost of medical services; but the amount of money they can spend on the additional insurance will be capped, while the cost of the services, themselves will not be capped. So…one can see that some health care costs under the Romney-Ryan plan will come out of the pocket of patients. Unfortunately, I do not see any other way of paying for health care needs—patients will necessarily have to bear some of the burden of high cost health care treatment in the future.

The President has claimed that under Romney-Ryan, seniors will have to pay $6400 more each year for health care coverage. This is not true; the figure is based on an old plan that is not under consideration any more.

There is one item in the Obama administration’s function that must not be overlooked; that is this: Under President Obama’s leadership, $10.7 billion has been saved by detecting and recovering fraudulent payments for supposed MediCare treatments over the past 3 years. That is, to my way of thinking, a very good start in dealing with MediCare fraud; but…it is estimated from several sources that MediCare fraud amounts to as much as $65 billion yearly! There is a lot of work to do here.

I, personally, favor the Romney-Ryan plan for the reason that I (and most Americans) can see that ObamaCare involves a huge expansion of federal government into our daily lives. I do not trust the government to control large parts part of my life. The Romney-Ryan plan would eliminate a lot of government control and allow free market forces to decide what the price of health care should be.

If any of my readers would like to look into this question more, the best source is http://usat.ly/Og9sGm.

Church-State relationships

Nancy and I have just returned from a family church camp put on by the Free Presbyterian Church of Scotland (Continuing). The camp was held in a very small community in western Virginia. Noah’s and Ben’s families were there; and we very much enjoyed seeing all of them.

The main speaker talked on the subject of The Establishment Principle of the church, an exposition about the relationship of the church to the government. The speaker was the Reverend Gavin Beers, of Ayr, Scotland. Reverend Beers presented four types of church/government relationships:

Type 1: Government dominated by the church.
Type 2: Church dominated by the government.
Type 3: Volunteeristic, i.e., people free to choose their own form of religion without governmental interference. Supposedly, the government would be neutral in all aspects of religion, allowing all religious groups to worship and behave as they see fit.
Type 4: Establishment principle, in which there is full cooperation between the church and the state. The church is allowed freedom to worship God and behave according to biblical principles. The state would not interfere with church operations. The state would suppress apostasy and punish heresy. Neither church nor state would dominate the other; the two would walk hand in hand, as friends.

Type three relationships are the present-day principles that most Western societies aim at manifesting.

Rev. Beers made the point that types 1, 2, and 3 are not consistent with the examples given in the Bible; most of his examples were taken out of the Old Testament. Only type 4, i.e., the establishment principle is biblically sound. I was told by one attendee that all the objections to the establishment principle are pragmatic objections. I would fully agree with that assessment—in my view, the establishment principle will not work in any present-day polity.

The reason that the establishment principle will not work is that we live in a multicultural world where there is no consensus of correctness in religion. Many different cultural groups have just as many different religious beliefs; and each one thinks all the others are wrong.

One major function of government is to prevent bloodshed among the populace. We, as humans in society, understand that types 1 and 2 relationships have resulted in extreme forms of violence and bloodshed among the people. I believe that none of us would like to go back to those kinds of church-state relationships. In like manor, I would be very reluctant to think of the establishment principle as the best way for church-state relationships to be set up.

It sounds good to think of the church and the state walking hand in hand as friends; but the truth is that if the state is authorized to stamp our apostasy and punish heresy, it would become necessary for the state to determine what apostasy is and what heresy is. That becomes very problematic, in my mind! In giving the state the function of figuring out what to punish and what to stamp out, we come very close to functioning in a type 2 relationship—the entity that holds the sword holds the control over the other.

So…we Westerners have come to the conclusion that we just want the government out of our religious business; we want to be left alone, if possible. On the other hand, we want the option of expressing our religious beliefs freely and of helping other people to see religious things the way we do. I believe that the proper Christian thinking would leave it at that and expect the Holy Spirit to do the work of conversion. I believe that the Christian faith can hold its own in any kind of reasonable discussion—we do not need the force of the state behind our belief system. Let us function openly in the marketplace of ideas.

We Christian peoples should have learned from history the dangers of governmental intervention in religious matters. I am told that the magistrates of the ancient Persian Empire discovered the value of separating religions from the administration of the government; and the result was, for the most part, peace among the populace. But…over and over, again, governments have been established that interfered with freedom of religion. History is full of that kind of civic governmental meddling in religion—all to the detriment of the people.

I believe that Rev. Beers makes the mistake of thinking that the descriptions of church-state relationships in the Old Testament are prescriptive of the way things should be today. I believe that those descriptions  were just that, i.e., descriptions. They were not prescriptions of what we should be doing today. As a matter of fact, organizing church-state relationships as Rev. Beers suggests it is an open invitation to conflict, persecution, limitation of Christian freedom, and bloodshed.

We Western democratic republicans have demanded freedom of religion. Well, if we really mean that, it means that all religions must be granted that religious freedom. “Freedom of religion” is not just freedom for Christians; it is freedom for all religions in the realm.

I must admit, however, that Rev. Beers suggested that the establishment principle might apply only in the millennium. I would suggest that it might only apply even at a later time—that is, in heaven, itself.

Another objection I have to the establishment principle is that I just do not have enough antipathy toward other religious people to apply it. I would just as soon see them practice their own forms of religion in their own ways—with two caveats:

1)   I want freedom to present the claims of Christ to my neighbors. I am willing to listen to them if they wish to express their religious beliefs to me; but I want to be able to reason with them about the basic features of Christianity. I firmly believe that the Christian faith can hold its own in a straight up reasonable debate. I also believe that the Holy Spirit can act on the hearts of unbelievers. I do not need to worry about getting some external, governmental force to back up my desire that they be converted; nor do I welcome the government ferreting out apostasy and heresy. I do not welcome governmental interference in my evangelical efforts.

2)   I want the government to intervene in religious conversations, even to the point of exerting force, if any particular religion is advocating overthrow of the government. That is the only reason I think that government intervention is appropriate. Following are two examples of anti-government rhetoric that should certainly be censored by the government:

a)    The Wahhabi branch of the Sunni Islamic religion has several mosques in the United States that advocate violent reaction to the American way of life. A study conducted by the non-governmental organization, Freedom House, found Wahhabi publications in mosques in the United States. These publications included statements that Muslims should not only "always oppose" infidels "in every way", but "hate them for their religion … for Allah's sake", that democracy "is responsible for all the horrible wars of the 20th century", and that Shia and certain Sunni Muslims were infidels. This kind of doctrinal teaching should be monitored by the government and silenced for the public peace.  

b)   The Reverend Jeremiah Wright of the Trinity United Church of Christ in Chicago has been documented as saying several very un-American statements in public discourse. Rev. Wright was the pastor of President Obama and his wife for many years, but it must be said that the president and his wife have strongly repudiated these un-American remarks and have withdrawn their membership from that church. This kind of anti-American talk needs to be silenced by the government for the sake of the public peace. There are other examples of anti-American rhetoric going on in our country, e.g., flag burning, etc. All of this should be forcibly suppressed by the government.

So…what do I think should be the proper relationship of church to state? I believe that Christians should be actively advocating for Christian principles in government by helping Christians get elected to government office. I believe that we have the responsibility of keeping ourselves informed of social and political affairs and for writing letters and e-mails to our representatives expressing our beliefs. I believe that we should be presenting Christian issues from the pulpits of our churches and actively promoting Christian politicians there.  I also believe what was said by President Ronald Regan. He said that if a candidate for office expresses 60%-80% of what you want to see in that office, vote for him. There are no perfect candidates. Not to vote is to violate your sacred duty as an American citizen. We are the most fortunate people in the world to be Americans.

To bring this discussion down to practicalities, if you are opposed to the policies of the Obama Administration and you refuse to vote for Mitt Romney, you are automatically voting for President Obama.