Plus Ça Change …

It turns out that the data used to support the conclusions in French economist Thomas Piketty’s book Capital in the Twenty-First Century has been fudged. This undermines the credibility of yet another bit of “research” that bolstered a progressive political meme, increasing economic inequality.

I’m reminded of Michael Bellesiles’s Arming America.

plus c’est la même chose.

Intended Unintended Consequences

People are often surprised by the unintended consequences of their actions. For example, it was forest management policy to aggressively put out wildfires for many years. That resulted in forests full of quick-burning fuel in the understory—and spectacular, devastating forest fires.

The government’s attempts to manage the economy have been no better. The more it has fiddled, the worse things have become. Now, the Brookings Institution is reporting an across the board decline in business dynamism around the country.

The Blue State Model suggests responding with more government intrusion into the economy. States such as Maryland are doing things such as raising their minimum wage above the national level. The unintended consequence will likely be that marginally skilled workers will be priced out of the legal job market to become more of a drag on a state budget starved because of reduced economic growth.

DaTechGuy suggests that the conservatives in the Blue States should call the Left’s bluff and let them pass such ill-conceived laws. He suggests that the result would be to drive economic and population growth to the Red State, increasing their clout at the national level. It’s a strategy not unlike letting a drunk keep going till he hits bottom.


The Minimum Wage Economy

Governors Bobby Jindal (R-LA) and Dannel Malloy (D-CT) sparred at a press briefing outside the White House follow a National Governors Association meeting with the President. Politico reports that Jindal noted that the President placed great stress on raising the minimum wage during the meeting. “The Obama economy is now the minimum wage economy. I think we can do better than that, I think America can do better than that.” He spoke out in favor of action such as reduced regulation or building the XL Pipeline that would benefit Louisiana’s oil and gas industry.

Malloy disagreed noting, “So let me just say that we don’t all agree that moving Canadian oil through the United States is necessarily the best thing for the United States economy.”

Jindal replied, “We think we can grow the economy. We think we can do better than the minimum wage economy.”

Jindal’s remarks do describe what some Americans are now seeing. Unemployment and underemployment are becoming the new normal in many places. We have a measure of prosperity here in the DC area that doesn’t exist in large sections of fly-over country. If Republicans can convince voters that they can do better, this will be a very bad year for Democrats. OTOH, if the voters continue to see Republicans as described by P. J. O’Rouke (“The Republicans are the party that says government doesn’t work, and then they get elected and prove it.”), …

Sometimes Rules Cut Both Ways

The IRS is proposing to rewrite the rules for 501(c)4 “social welfare” not-for-profit organizations in ways that would drastically reduce their political activities. The general buzz is that this is being done at the behest of Democrats in the Senate who worry about organizations such as Americans for Prosperity. Eliana Johnson has a report over at NRO over the Left’s reaction to the proposed rules.

The proposed regulations have a host of left-leaning groups worried that the 501(c)(4) rules could serve as a template for regulations governing 501(c)(5) nonprofits (unions) and 501(c)(6) groups (trade associations), and they are speaking out.

Also, leftwing 501(c)4 outfits are waking up to the threat to their activities. Being able to help deliver votes engage in voter registration is often a key part of the business model of such organizations.

Income Equality, and How Not to Achieve It

The WSJ has a post up explaining just how much income redistribution the federal government is doing already and what it would take to give every family an “average income.”

Many people believe the “rich” can afford to pay higher taxes since they command a disproportionate share of the nation’s income. However, the current amount of redistribution already takes 21% of the top quintile’s [20%] income. That would have to soar to 74% to make every family in America “average.”

I’m in that top quintile. I’ve gone back to work from retirement, but if the feds were to start taking 74% of my paycheck (on top of what Maryland takes), I’d find a way to be less productive so that I could keep at least half of what I make. Given that many, if not most, other high-income earners would do much the same thing, the amount of money available to be taxed from us would go down, which would drive the tax rate up, which would drive more earners to be less productive, which would result in the need for a further tax increase, which would …

The problem with socialism is that it always runs out of other people’s money.

—Margret Thatcher

The Wealth of Nations & States

There’s an interesting map over at Strange Maps that shows the states renamed for countries with similar GDPs. My native state of Tennessee is labeled “Saudi Arabia,” and my current state of residence Maryland is labeled “Hong Kong.”

I did a bit of math to find the per capita GDPs of the two states. Tennessee’s was around $44k, and Maryland’s was around $32k. Given that several of the richest counties in America are in Maryland (suburbs of DC), I found that result a bit surprising. OTOH, Tennessee has a much better business environment, and that likely has something to do with the 37% boost.

Yep. As I think about it, those counties do well because of direct federal employment or folks like me who do federal contracting work. The rest of the Maryland struggles under blue state government interference and mismanagement.

It’s the Economy, Stupid

The latest polls show that just under half of the public sees the economy as the number one issue in the country. Some leftwing pundits are trying to seize on that as proof that Obamacare will fade as an issue as the election draws near.

Sure. Obamacare has had no effect on anyone’s having hours cut back to less than 30 per week. It’s had no effect on any small business deciding not to hire a 50th employee. And no one has had to replace the healthcare they liked with something more expensive. Or drop coverage because it was no longer affordable. Yep. Those definitely aren’t economic issues.

Let it burn.

On Losing Wars

It’s been almost 70 years since America has won a war. We won WWII because we knew what our goals were and we ruthlessly pursued them. Since then, we’ve halfheartedly pursued ill-defined goals.

The Korean War is technically still ongoing. 1953 brought an armistice not a victory. We didn’t win in Viet Nam. Grenada and Panama weren’t real wars. Desert Storm freed Kuwait, but we had to come back and clean up the mess we made. If anyone thinks we won the cleanup match, I suggest they visit Fallujah. Bombing Serbia? Afghanistan?

But the two worst defeats were not overseas. We’ve also lost the War on Drugs and the War on Poverty.

Today is the 50th anniversary of Lyndon Johnson’s declaration of the War on Poverty. 50 years and 20 trillion dollars later, the percentage of American’s living in poverty is still around 15 percent. Back in the ’60s, most of the poor were working poor. They had jobs but couldn’t make ends meet. Now, we have created a new class of idle poor who make ends meet because of support from over 80 means-tested federal programs. 50 years ago, the poor were often hungry. These days, the poor are often overweight and suffering from diabetes.

LBJ’s stated goal for the War on Poverty was “to give our fellow citizens a fair chance to develop their own capacities.”

We have failed.

Elections Have Consequences

Emily Miller reports in the Washington Times that

Beretta has eliminated Virginia from its short list of states to move its company because anti-gun Democrat Terry McAuliffe was elected governor.

The firearms manufacturer made the decision to scratch Virginia off the list after the McAuliffe campaign fixated on restricting gun owners’ rights after receiving over $1 million in campaign donations from billionaire New York City Mayor Mike Bloomberg.

Beretta is leaving Maryland because of the state government’s anti-gun policies.

Homeopathic Economics

WSJ has a post up about Senator Fauxcahontas’s proposal to raise Social Security benefits. You see, since seniors are having a rough time these days, we should raise the FICA tax to pay for increased benefit—in spite of the depressive effect that the tax increase would on the economy which would make times even tougher for everyone.

(H/T, Instapundit, who asks “What could go wrong?” Perhaps a better question, given the government’s recent meddling in the economy, would be “What could go right?”)