Sep 7, 2015, Vol. 20, No. 48 • By IRWIN M. STELZER
The economic recovery is barely worthy of the name, and there is evidence that inequality in America is increasing. Ignoring the first rule of statistics—correlation is not causation—progressives see this as a new reason to expand government. Reduce inequality and the growth rate will increase.
But there is more assertion than fact in the claim that increased inequality results in slower growth. Some studies suggest that to be the case, others point out that so many factors determine an economy’s growth rate that heeding the call of the redistributionists will not add much to the flagging growth of our economy.
Still, respectable economists at the International Monetary Fund, famous for the speed with which they revise their forecasts, and the Organisation for Economic Co-operation and Development say significant income redistribution is needed if advanced economies are to grow faster. These practitioners of the dismal science are joined by our homegrown left-leaning economists—when they are not busy criticizing these very same organizations for backing the growth-devastating austerity Krugman & Co. contend has turned bad to worse in Greece.
All of this has morphed into criticism of the American economic model. Years ago it was Mussolini who made the trains run on time, then communism that would spread prosperity to the masses by sending capitalists north, then National Socialism that had the answer to a worldwide recession (rearmament). More recently we’ve heard hosannas to the centrally directed Chinese model, which now seems threatened by its internal contradictions. Now it is any system that is less unequal than ours, although beware of comparative data: The gap between Vladimir Putin’s reported income and that of a Moscow store clerk is probably less than the gap between a successful investment banker and a New York sales clerk. And if it turns out that reducing inequality can’t be defended as a growth enhancer, well, it surely can on grounds of fairness.
Not “surely.” If we are indeed engaged in a search for the economic system that looks in the mirror and declares itself the fairest of all, as President Obama believes he sees in the European democratic socialism model, it is not the income distribution figures that should be our guide. Most advanced economies do well by those on the top of the heap. The rich will always be with us, to borrow from Matthew, unless it was Mark. The place to look for which is the fairest is at the bottom: In which economic system is the living standard of the poorest highest? In America, some 50 million people live below the official poverty line, but that measure does not include food stamps, rent subsidies and entitlements, and other income transfers that supplement their wages. As scholar after scholar has pointed out, although being poor is not as much fun as being rich, and being poor can involve considerable hardship, the typical household living at 125 percent of the official poverty line or below owns a car, lives in an air-conditioned house, has cable or satellite service, a refrigerator, a microwave, and those with children have a game system. And 84 percent have two or three color television sets according to the Energy Information Administration. The average poor American has more living space than the average European.
So before attacking inequality by raising taxes on the rich and hiking the minimum wage, think of the word used by the great William Buckley: “stop.” Stop taking cash out of the paychecks of the poor and middle class to subsidize $85,000 electric cars for Hollywood celebrities; stop raising the energy bills of the poor and of struggling workers by forcing them to buy wind-produced energy instead of cheaper coal- and natural-gas-based energy; stop making it difficult for poor and even not-so-poor farmers to make a living so that little fish can swim around unimpeded; stop the government monopoly from fleecing middle-class taxpayers to support students who don’t want to repay their loans; stop taxing Joe the plumber for gasoline he buys to get to work so that richer cyclists have still more bike lanes in which to amuse themselves. There’s more, but you get the idea. I hope this bit of hyperbole helps to focus the debate.
And what the next president can do about it.Aug 24, 2015, Vol. 20, No. 47 • By IRWIN M. STELZER
The late great comedian Milton Berle, when introduced to an enthusiastically applauding audience, would hold up his left hand in a modest gesture as if to say thank you but that’s enough, and with his right hand held at waist level encouraged the audience to even wilder applause. President Obama has just accomplished a similar feat. With one hand he has delivered his Clean Power Plan, designed to reduce the use of our own resources of fossil fuels.
A Harvard professor throws shade at a much-hyped announcement.3:26 PM, Jul 30, 2015 • By GRANT WISHARD
The sun is a stubborn on-again-off-again partner in our solar energy relationship. With no way to store excess solar energy, solar homes are forced to return shamefacedly to the electrical grid each evening, not to mention in moments of cloud cover and/or rain.
11:31 AM, Jul 23, 2015 • By IRWIN M. STELZER
Conservatives of America, unite. You have nothing to lose but regulations and subsidies. Hark. Listen up. Pay attention. And if there is any other cliché that might get your attention, pencil it in.
4:14 PM, Jul 22, 2015 • By SHOSHANA WEISSMANN
A new report by the American Action Forum, a center-right policy institute, details adverse economic consequences of the Keystone XL pipeline's delay.
5:29 PM, Apr 20, 2015 • By GEOFFREY NORMAN
The original corn laws put tariffs on imported grain in an effort to help domestic producers. That was nearly two centuries ago, in England, and the experiment is taught as an example of bad economic policy. But people never learn and in this country, today, we have the renewable fuel mandates which have been a boon to corn farmers in Iowa (among other states) where presidential candidates are obliged to speak in favor of a policy that is a drag just about everywhere else in the country.
The five hidden ways you’re paying to subsidize renewable power. Apr 27, 2015, Vol. 20, No. 31 • By BRIAN H. POTTS
Do you want to know how to beat the stock market? In 46 of America’s 50 largest cities, installing a fully financed, typical-sized, residential solar power system will do just that, according to a Department of Energy-backed study released earlier this year. In other words, by investing in solar panels, most homeowners will save more in electric costs over the next 25 years (the approximate life of the system) than they would earn from investing the same money in the stock market over that same time period.
The Hawkeye state is first, don’t think about cutting in line. Big corn will crush you.1:05 PM, Mar 22, 2015 • By GEOFFREY NORMAN
Iowa took umbrage, last week, over something an operative for Scott Walker said. Or, to be precise, something she once tweeted. For her indiscretion, Liz Mair was forced to resign from Walker’s political action committee. Walker is not yet an officially declared candidate for president but that is just political coyness.
1:05 PM, Mar 20, 2015 • By THOMAS JOSCELYN
In his annual statement marking the Persian new year, President Obama said he believes that Iran and the U.S. “should be able” to resolve the dispute over the mullahs’ nuclear program “peacefully, with diplomacy.”
12:55 PM, Mar 20, 2015 • By MICHAEL WARREN
To hear administration officials tell it, the "fourth quarter" of the Obama presidency will be focused on economic growth and what the president calls “middle-class economics.” Brian Deese, senior advisor to the president on climate and energy, emphasized this at a Friday breakfast with reporters sponsored by the Christian Science Monitor.
Time to counter the Saudis with a tariff? Feb 16, 2015, Vol. 20, No. 22 • By IRWIN M. STELZER
We are in a war with Saudi Arabia—and losing. The Saudis aim to regain substantial control of our oil supply by driving from the industry many of our shale-oil-producing frackers who have reduced the power conveyed to the kingdom’s rulers by the underground ocean of oil on which their palaces sit. And we seem prepared to let them do just that, by failing to do what is necessary to prevent a reversal of the major strides we have made to get out from under the boot of an avaricious oil cartel.
3:54 PM, Dec 19, 2014 • By GEOFFREY NORMAN
Thanks to (mostly) fracking you can not only drive to work for less than before, you may now be writing a smaller check to cover the mortgage. As the Wall Street Journal reports: