Archives for September 2012

Steve Pearlstein’s Straw-Men On Steroids

President Obama is notorious for frequently making  straw-man arguments – i.e. saying or implying that your political opponents make a certain argument or think a certain way, when in fact they do no such thing.

Is there an award for Straw-Man Columnist of the Year? If so, then the Washington Post’s Steve Pearlstein should take top honors.

His column today was one insult after another to job creators. Yes, the disdain for job creators, of all people, is even explicit in the column’s title: “I am a Job Creator: A Manifesto for the Entitled”.  Huh? Such an anti-business person writing a column in the Post’s business section? That’s like having a creationist write a column for the Science & Evolution section.

He says job creators feel “entitled” to all sorts of things such as:

I am entitled to a duty of care and loyalty from employees and investors who are owed no such duty in return.
I am entitled to operate my business free of all government regulations other than those written or approved by my industry.
I am entitled to load companies up with debt in order to pay myself and investors big dividends — and then blame any bankruptcy on over-compensated workers.
I am entitled to contracts, subsidies, tax breaks, loans and even bailouts from government, even as I complain about job-killing government budget deficits.

He lists dozens of wacky notions like that, providing absolutely no evidence of such attitudes. Not only do his targets of criticism not feel entitled to those things, but the assumptions behind all of those things are wrong as well. One often finds writers such as Pearlstein who try to overwhelm their critics by making accusation after accusation but never backing any of them up, hoping that their critics will be drowned out in all the noise. In opinion articles, you’re supposed to state a thesis and use evidence to prove that thesis. But he has dozens of little bite-sized theses, with no proof for any of them, because if you tried doing that you’d quickly realize they’re full of holes.

It’s impossible to rebut all of his accusations without writing a 10,000-word paper, so let me just focus on a few (which I shared in the comments section of his article):

Pearlstein is demonizing job creators again. Steve have you ever considered how hard it is to start a business and figure out how to bring in enough revenue to even pay one employee let alone pay yourself? It’s frightfully hard – which is why 99 percent of the people – presumably including yourself – never even bother trying.

You see, business owners and the other private-sector people you speak of get their money through wealth creation. They create something of value provided to other people who voluntarily exchange their money for it. The only private-sector folks who get their money by wealth coercion – not creation – are trial lawyers, who you probably never demonize. And of course, the people who get actual entitlements from the government obtained that money through wealth coercion as well. (If people financing those entitlements don’t pay their taxes, law enforcement will come a calling, with the use of force if necessary).

You speak of poor quality of private sector service versus government sector services. Steve when you have to sell something and lose your shirt if you don’t, you’re highly motivated to provide good service. In the government, by contrast, if you provide subpar quality service, the coerced money keeps a coming, so little motivation there. Just compare the lines at the post office with the lines at FedEx. Or just ask the former Soviet Union.

You speak of government-provided services like transportation infrastructure and education that business people use. The irony, Steve, is that government-provided entitlements are crowding out those traditional government services. Entitlements now make up two-thirds of the federal budget, up from one-third a few decades ago. They’re on track to reach 75 percent of the federal budget in a decade or so, squeezing out funding for roads and bridges and education and the like. When, Steve, was the last time you sounded the alarm about that? In fact, you’re probably among those who support every new entitlement program that comes along, in addition to resisting any “cut” (actually decrease in the rate of growth) in entitlements. You’re part of the problem of entitlements crowding out traditional government services, Steve, not the solution.

Moreover most business owners aren’t bigwig executives that you caricature. They’re small business owners trying to make ends meet and trying to pay their taxes. You know what happens when they’re a little late in their taxes? The penalties are enormous – the feds milk small business owners big time when that happens. Often makes one not even want to be in business.

Ever wondered why unemployment has been so high for the past four years? Because of people like you in and out of government, demonizing business owners.

Why the Status-Conscious Would Want to Tax the Rich

Three common reasons for wanting to raise taxes on the rich include: 1) that’s where the money is, 2) envy, and 3) envy-avoidance.

A fourth reason for wanting to raise taxes on the rich: to boost one’s social status. Or more accurately, to mitigate one’s (perceived) inferior social status.

Lots of people are status-conscious. They strive for more and better material goods (and services) and/or higher pay in an effort to gain more respect and feel good about where they stand in relation to others. “Money often translates into the respect of others and high social status, and so even those who don’t want many worldly goods may want a high income for the respect it brings,” write Ed Diener and Robert Biswas-Diener in their book Happiness: Unlocking the Mysteries of Psychological Wealth.

In a study, Harvard economists David Hemenway and Sara Solnick asked respondents if they would rather earn $50,000 a year in a society where others are making $25,000, or earn $100,000 a year when others are making $200,000. Fifty-six percent chose the former – i.e. being relatively poorer at $50,000 a year, only because of the higher social status that would entail.

This implies that lots of people no doubt hate it when other people earn more than them, not necessarily because of envy, but because it means they feel less respected than the person earning more. It’s a type of inferiority complex. In order to gain more respect – or more accurately, in order to feel less disrespected – they’d really like to bring those wealthier persons down a notch or two.

What better way to do that than to – you guessed it – raise taxes on the rich?

My hypothesis is that this is another reason why you find a lot of wealthy Democrats: because even though they’re wealthy or upper-middle class, there are still a lot of folks wealthier than them. And they may desire higher taxes on the rich particularly if their taxes would stay the same or wouldn’t rise as much. Of course, this doesn’t apply to all wealthy Democrats, but it likely applies to some of them. They’re just like the people in they study who wouldn’t like to be earning $100k while others are earning $200k.

Another implication: while the left would have you believe that left-leaning people don’t care as much about wealth or materialism or staying ahead of the Joneses, a lot of them surely do. The more you care about such things, the more likely you are to be status-conscious, and therefore the more likely you are to want to reduce the higher status of others in order to gain more (perceived) respect for yourself.

Of course, in addition to wanting to raise taxes on the rich because of envy, this “status inferiority complex” as I call it would be a selfish, shallow, and immature reason for wanting to do so. That’s why I suspect that testing this hypothesis would be difficult: few people would admit to it. But it still could be possible, perhaps by surveying psychologists based on what they’ve gleaned in therapy sessions, or by surveying people themselves with the hope that some of them would be brutally honest in their answers. This is a long shot but hey reader, if you’ve ever felt that way, please share your thoughts in the comment section below.

On the flip side, if the above is true, then it’s plausible that some wealthy folks resist higher taxes on them due to a status superiority complex, a.k.a. snobbery. And they likely would harbor both a status superiority complex and a status inferiority complex simultaneously, assuming there are still people richer than them. But if raising taxes on the rich is bad policy anyway – which it usually is because it disincentivizes production thereby harming economic growth and thus harming everyone – then the societal consequences of a status superiority complex aren’t near as harmful as a status inferiority complex.

Meanwhile, in the first paragraph of this article you’ll note that I didn’t include “reducing inequality” in the list as to why people want to raise taxes on the rich. This is because it’s implied in the other items in the list.

Surely inequality would be bad if we lived in a zero-sum society where the rich get richer through wealth coercion – i.e. stealing from the poor and middle class and thereby making the poor poorer. But we live in a positive-sum society where the vast majority of those who are rich got that way through wealth creation, not wealth coercion. The history of America is the story of the rich getting richer and the poor and middle class getting richer. (Of course there have been some years where the poor have gotten poorer, like now during the Obama years, but it’s certainly not because of wealth coercion by the rich, but because of a relative lack of wealth creation.)

So regarding inequality, who cares if the rich get richer as long as everyone else gets richer as well?

I’ll tell you who cares: the envious, the envy-avoiders, and the status-conscious.

The Ironies of Elizabeth Warren

Apart from initially wiping out any mention of “God” from the party platform, one of the biggest manifestations of the Democratic Party’s lurch leftward is the elevation of the “wealth-is-theft” school of thought.

The notion that the wealthy got their money through institutionalized theft used to be championed just by people on the far-left fringe, like Bill Ayers and Bernardine Dohrn. But at their national convention earlier this month, Democrats not only featured a speaker championing this school of thought, but gave her a coveted, prime-time slot – right before Bill Clinton.

Folks, it’s not your mom and dad’s Democratic Party anymore.

The speaker was Elizabeth Warren, who’s running for Senate in Massachusetts (and infamous for her claims of being part Cherokee Indian).

For more on the demagoguery, click here.

The ultimate irony? That Ms. Warren and her cohorts on the left are protectors of actual wealth transfer from the poor to the rich. As explained in the post below, the 15.3 percent payroll tax on the working poor, perversely, helps fund Social Security and Medicare payouts to middle- and high-income retirees. Whenever Congressional Republicans propose “means-testing” so that transfer payments don’t go to the rich, Democrats balk.

Yet another irony: Awhile back, lefties swooned over Ms. Warren’s comment along the lines that job creators should pay more taxes because of the government services provided to them like roads, police, education, etc.

But as explained in an earlier blog post, we’re getting less of those essential government services because of people like Elizabeth Warren!

The left is fueling the biggest crisis in government: the crowding out of things like law enforcement, fire protection, transportation infrastructure, education, environmental protection, etc. by wealth redistribution. Fully two-thirds of federal government spending goes toward entitlements and other redistribution programs – up from about 25 percent several decades ago. And with Obamacare, it’s on track for 70 percent in a few years. For a short video on the subject, click here.

Basic government services are getting squeezed out. Yet Ms. Warren and her allies relentlessly call for more wealth redistribution, tightening the squeeze.

Yale Grad Shocked that Dems Take from Poor and Give to Rich

There was a commentary in HuffPo focusing on the 15.3 percent Social Security and Medicare tax that the working poor have to pay.

I commented that this 15.3 percent tax on low-income earners originally was meant to be put in a lockbox or savings fund for their use after they retire, but it just gets immediately spent on current government programs – and perversely, helps fund the Social Security and Medicare payouts to middle- and high-income retirees.

That means we need to put that 15.3 percent in an actual savings fund for the worker’s own use when he or she retires, and also stop transferring payroll tax money from the poor to middle- and upper-income retirees.

Guess who’s standing in the way of that? Dems. Whenever the Repubs try to enact personal savings accounts, the Dems quash the idea, and whenever the Repubs propose means-testing so that transfer payments don’t go to the rich, the Dems kill that as well. The latter aren’t just for welfare for the poor, but for all.

Later I got a reply from “NOTSUPERMOM” whose tagline is “A waste of a perfectly good Yale education,” who’s a “HUFFPOST SUPER USER” and who has 151 fans. She wrote, “I’m surprised and disappointed to hear that Democrats are not in favor of wealth-based social security payouts. It seems completely in line with party policy to direct the payouts to those who actually need them. Can you give me a citation for that vote? Thank you!”

I replied to her, sure. Google “means-testing” and you’ll find lots of material indicating Repub support for it but not Dem support. A case in point is here.

Well, so much for that perfectly good Yale education.

Get Your News from Right and Left

You shouldn’t just patronize news outlets with political bents similar to your own, while always ignoring outlets with a different ideological bent. If you do that, you’re denying yourself crucial information.

A good example was yesterday, vis-a-vis the Democrats’ national convention. A political hot potato was brewing: it was being reported that Democrats had taken “God” out of its platform, as well as language saying Jerusalem should be the capital of Israel.

But no stories of the kind showed up on the go-to publication for lefties, The Huffington Post – at least none that I saw. (And if there was any story on it, it was well hidden.) The publication has an unabashedly leftist bent, and it’s reluctant to publish stories that are embarrassing to or reflect negatively on the Left – unless such a story gets so hot that it has no choice but to feature it.

It was only when chaos erupted at the DNC, when they took a voice vote to reinstate the language – the chairman ruled “yes” even though it was generally agreed that the “no” voices were louder – that The Huffington Post went to press on the issue.

Readers of The Huffington Post were blindsided. If you’re accustomed to only reading that publication, then you would have had no idea that that issue was brewing. The Huffington Post did its readers a big disservice by ignoring the issue until it came to a head.

Poor Woody Allen. He only has two buttons on his iPhone he can touch – the weather and The Huffington Post, he told the Wall Street Journal. He must have been blindsided too.

I recall a similar thing happening in The Washington Post eight years ago vis-a-vis the swift boat issue involving then-presidential candidate John Kerry. The Post ignored the story (at least on its front page) – until information came out on it that put Kerry in a positive light. It reminded me of someone getting repeated legitimate criticism for something, and just sitting there staying silent all along, taking it in and fuming, unable to rebut. And then when information finally comes out that’s useful for that person, the person finally speaks up.

There’s also the well-known example of ABC newsman Charlie Gibson, during a radio show, getting blindsided regarding the scandal in which video of an ACORN worker advises a couple pretending to be a pimp and prostitute. That ACORN story had been all over right-leaning news outlets. It’s a good bet that Charlie Gibson wasn’t a regular reader of them. That’s extremely risky when you’re a national media professional.

And yes, right-leaning news outlets ignore stories that may be embarrassing to the Right. I recall seeing noteworthy things in The Huffington Post that I didn’t see on Foxnews.com. Of course the editors probably would argue that they don’t consider something as significant news, and so don’t report it. But sometimes it blows up in their face.

So the moral of the story is to read publications on both sides of the political spectrum. If you don’t, you’re denying yourself significant news.