Sunday, April 14, 2013

Hope = smaller, more effective government; greater choice.

Over the last ten years, more than 60% of the three million new jobs in American were created by the nine states without an income tax. Every year for the past 40 years, states without an income tax had faster growth than states with the highest income taxes. Economic growth in the nine states without income taxes was 50% faster than in the nine states with the highest top income tax rates. Over the past decade, states without income taxes have seen nearly 60% higher population growth than the national average.

--Gov. Bobby Jindal (R-LA)  

policies [that encourage enterprise and spark economic growth] have been pursued not only by Republicans but also by Democrats who don't share their national party's notion that business should serve as a cash cow to fund ever more expensive social-welfare, cultural or environmental programs.

--Joel Kotkin, Wall Street Journal  

historically, “people have always turned to Washington in times of economic crisis, but now they’re losing confidence in the government’s ability to reshape the economy, and that affects their buying and investing habits.”

--Thomas Friedman, New York Times

Conservatives, even Friedman-type moderates, know big government isn’t working. We live with two obvious truths: 1) progressive government is failing to provide economic growth and jobs, and 2) the bottom 75% suffer as a result.

The economy is bad, and geographer and ex-liberal Joel Kotkin thinks he knows why:
the decline of small-business sentiment constitutes arguably the biggest reason for our poor job-creation numbers. If small business had come out of the recession maintaining just the rate of start-ups generated in 2007. . . the U.S. economy would today have almost 2.5 million more jobs.
Kotkin points specifically at the difficulties faced by smaller community banks, those most likely to lend to entrepreneurs. Kotkin thinks the Fed's policies and a growing regulatory environment have created an “unprecedented concentration” of financial assets in the hands of a few large "too big to fail banks," just as the number of smaller community banks is shrinking--330 fewer since the passage of Dodd-Frank bank regulations. Says Kotkin, “In 2013, the top four banks controlled more than 40% of the credit markets in the top 10 states, up by 10% from 2009 and roughly twice their share in 2000.”

The real reason for investment-killing low interest rates: government needs low rates to fund itself. Kotkin laments,
corporate cronyism remains at the core of this administration and, sadly, the once-proudly populist Democratic Party. [It’s all] reminiscent of . . . the declining days of the Roman Empire. The masses get bread (food stamps) and circuses, with virtually all of Hollywood and much of the media ready to perform on cue. The majority, losers in the Bernanke economy, lack the will . . . to realize what is happening . . . "The Roman people are dying and laughing," the fifth-century Christian writer Salvian wrote. Like America today, entertainment-mad Rome suffered from a declining middle class, mass poverty and domination by a few wealthy patricians, propped up by a compliant government.
We suffer from a sharp disconnect between our rulers and the rest of us. As Matthew Continetti at the conservative Washington Free Beacon reported, when CBS asked, “What do you think is the most important problem facing this country today?” only 3% of responding Americans said guns, and immigration did not make the list. The economy, the deficit, and health care came in 1,2,3. The American political class is debating issues that have nothing to do with the priorities of most of those the elite claims to represent.

 Continetti believes that
the current liberal moment [won’t] persist indefinitely. The gun or immigration [drive] most likely will fall apart if Republicans, or even Democrats who still might like to speak for the working man, wake up and ask why American politics is occupied by the pet issues of liberal elites.
The libertarian magazine Reason’s Ronald Bailey wants us to remember that total government spending in the U.S. has grown from 17% of GDP in 1948 to 35% in 2010. Remember this growth, because according to public choice theory,
the more resources government bureaucracies control, the more lobbyists, crony capitalists, and entitlement clients will appear seeking to divert handouts into their pockets. Such would-be beneficiaries need experts to construct the facts that they use to justify to political patrons and agency bureaucrats why they deserve a share of the government's largesse. To the extent that we live in a "post-truth era," it is in good measure because it pays so well to dissemble, exaggerate, and spin for government grants and favors.
Public choice theory calls for a reconciliation of social values and individual choice. And Bailey sides with urban planners Horst Rittel and Melvin Webber, who argued in a 1973 paper that the bias should be in favor of individual choice, which:
“would promote widened differentiation of goods, services, environments, and opportunities, such that individuals might more closely satisfy their individual preferences." Instead of entrusting decisions to purportedly "wise and knowledgeable professional experts and politicians" who aim to impose the "one-best answer," individuals should be allowed to pursue their own visions of the true and the good.
The institution best known, of course, for increasing differentiation between goods, services, environments, and opportunities and for enabling people to express differing values is the free market. Markets don't need experts. Every entrepreneur with a new idea, service, or product can try to profit from what they believe to be the truth.

No comments: