California • Center for American Greatness • Economy • Immigration • Infrastructure • Post • taxes • The Left

Second of a two-part series. Read part one.

Too Few Homes, Too Many Homeless: How to Fix It

It’s already spring in subtropical California. Up and down the coast, from Venice Beach to San Francisco, tens of thousands of homeless people live in makeshift abodes, strewn along the streets and alleys, the beaches and boardwalks, beside parking garages, freeway onramps, and under bridges. Their numbers are increasing every year. They now live openly in the hearts of magnificent downtowns, permanently encamped on the lawns of city halls and civic centers. In some areas, entire urban parks are filled with their tents. A perfect storm of court decisions and legislation have tied the hands of law enforcement, and well-organized activists join forces with well-financed nonprofits and their partners, politically connected developers, to prevent any practical solutions.

And so, day after day, Californians living and working near some of the most expensive real estate on earth pick their way through sidewalks littered with shit and syringes, dodging stoned junkies and screaming schizophrenics, hoping they won’t catch typhus or hepatitis as they make their way to their jobs, take their kids to school, and try to live normal lives. There is no end in sight.

The burgeoning population of homeless in California, now estimated at some 150,000 people, is a problem that could be solved in months if the appropriate political and judicial decisions were swiftly enacted and decisively applied. Instead, there is no indication it will ever be solved. The state has become a magnet for the welfare cases of America as well as the expatriates of the world, at the same time as the state has imposed crippling restrictions on the ability of the private sector to build new housing.

California is unaffordable because extreme environmentalists have imposed an agenda of engineered scarcity onto state policymakers that, unfortunately, dovetails perfectly with the agenda of special interests—in particular, public sector unions and bureaucrats, and large corporate land developers and construction contractors.

Virtually all of these special interests are aligned with the Democratic Party—the party of greed, lies, envy, and deception, controlled by leftist plutocrats and their willing accomplices. Until California’s voters wake up and break this immoral, self-serving coalition, there is little hope that housing prices in particular, or the cost-of-living in general, will ever come down in California.

Outside of blue-state America, the battle still rages, and victory is still possible. But to win, it will take bold policies, expressed with clarity and enthusiasm, policies that will offer struggling middle and low-income communities opportunities for upward mobility.

Towards a Housing Surplus and a Shortage of Homeless People

Here are policies that would make housing plentiful and affordable:

1) Eliminate all government subsidies, incentives, or waivers to developers. All players in the housing industry should be unsubsidized and play by the same set of rules.

2) Stop requiring diverse types of housing within the same development or neighborhood. Mixing high-density, subsidized housing into residential neighborhoods devalues the existing housing, and this social engineering is unfair to existing residents who have paid a high price to live there.

3) Rollback the more extreme building codes. Requiring 100 percent of homes to be “energy neutral” or mandating rooftop photovoltaic arrays, for example, greatly increase the cost of homes.

4) Lower the fees on building permits for new housing and housing remodels. Doing this might require pension reform, since that’s where all extra revenue goes, but until permitting costs are lowered, only ultra-wealthy developers can afford to build.

5) Speed up the permitting process. Development approvals should take days or weeks, not months or years. Again, the practical effect of this failure is that only major developers can afford to build.

6) Reform or eliminate state and local environmental regulations. In most cases, Federal laws already provide adequate environmental safeguards.

7) Make it easier to extract building materials in-state. California, for example, is spectacularly rich in natural resources, yet it has to import lumber and aggregate from as far away as Canada. This not only greatly increases construction costs, but it’s also hypocritical.

8) Increase the supply of land for private development of housing. Currently, only 3.6 percent of the continental United States is urbanized. There are literally hundreds of thousands of square miles of nonfarm, noncritical habitat that could be opened up for massive land development.

9) Engage in practical, appropriate zoning for infill and densification in urban cores, but only after also increasing the supply of open land for housing, and only while continuing to respect the integrity of established residential neighborhoods.

Along With Policy Solutions, Expose the Corruption

Democratic politicians, backed by an establishment coalition that wields overwhelming financial supremacy in the political arena, have sold their program as morally superior to Republican alternatives. But their case, marketed to voters by the finest political campaigners and public relations firms that money can buy, falls apart under the weight of facts.

The cold economic truth about Democrats in California is this: They have made it the most inhospitable place in America for low and middle-income residents. Unchecked, they’re going to do it to America. But they do not hold the moral high ground. They are immoral hypocrites, slandering their opponents, exploiting their supporters, and laughing all the way to the bank.

Providing opportunity by making California affordable has a moral value. There is a moral value to embracing policies of abundance—by turning the private sector loose to increase the supply of housing, energy, and water—rather than creating politically contrived and artificial scarcity.

There is a coherent alternative vision to the self-serving politics of scarcity. But it would mean launching a sustained assault on government unions, extreme environmentalists and their allies, along with the plaintiff’s bar and the social justice fanatics who have taken over grassroots movements. It will require challenging not just their lofty idealism or their proclaimed altruism but also their premises and their methods.

A similar moral argument must be made to solve the problem of homelessness, and it will also require a sustained assault against a similar cast of characters. Over the past 30-40 years, the rights of the mentally ill, the homeless, and even the illegal immigrant, have been elevated to the point of impracticality but, even more disgracefully, to the point where everyone is worse off. Solutions will require litigation and legislation.

Immigration laws need to be reformed to take away the incentive for migrants to undertake perilous journeys. The mentally ill need to be taken off the streets and put back into hospitals. Criminals need to be reincarcerated. For those homeless who truly are simply down on their luck, without other options, housing codes need to be modified so that “permanent supportive housing” can take the form of a $399 10-foot-by-10-foot tent, pitched in a parking lot or field, with every dozen tents sharing a $649 porta potty. Sites can include central facilities providing showers and food distribution. Once the situation is stabilized, and Americans have taken back their streets and neighborhoods, additional amenities can be considered.

The moral high ground must be asserted at every turn. It isn’t a concern for the homeless that prevents offering them tents, porta-potties, and basic facilities for food and hygiene. It’s greed and corruption that diverts a few homeless people into expensive palaces, while the rest of them still live in dangerous squalor, destroying neighborhoods and public spaces. It is the naked, raw, sickening, institutionalized greed of a corrupt, failing society, run by crooks masquerading as saviors.

It is not moral to make housing unaffordable in the name of environmental justice. It is not moral to make government services unaffordable in order to reserve funds to pay government workers pensions that are many times more expensive than Social Security. It is not moral to make perfect the enemy of the good and deny a warm and safe tent to tens of thousands of homeless, in order to get a few hundred people into $500,000 apartments. It is not moral to turn American into a magnet for destitute foreigners, when only a small percentage of them will make it here anyway, and while native-born Americans cannot find housing or jobs.

Here’s another excerpt from another email from a Southern California resident. It epitomizes what has happened there, and what is going to happen to America if the bad guys win:

When I moved to Venice three years ago, my Mom and I invested in a triplex, which I live in and have been renovating constantly. It should have been a tear down, but I have been set on restoring the place, and it’s been a labor of love. It is so tough to actually upgrade your place as a landlord, I can’t even change my siding on my home without a permit and coastal commission approval (which isn’t even worth the hassle), yet large scale developments can bypass all zoning and environmental reviews.

My dad’s parents met picking fruit in Salinas County. Eventually they moved to Pomona and bought a plot of land. All of their paychecks went to building their home while they lived with family. It took them a long time, but they bought all the materials and built everything themselves. This became a major source of equity and it propelled them up into the next class bracket.

No one can do that today. Permits are so incredibly expensive and dealing with zoning and code is a nightmare. I am afraid that there is no even playing field anymore, and that upward mobility is dead. Everything really seems stacked against the individual taxpayer.

Democrats, and the powerful elites who back them, have turned California into a quasi-feudal state. Its residents now comprise an aristocracy of the privileged and connected, ruling over destitute masses who vote Democrat in order to receive promised government handouts, with the middle class in full flight. Meanwhile, California’s economy is reliant on artificially inflated asset values and an upcycle in a volatile high-tech industry. The financial headwinds that buffet California are going to turn into a hurricane. It’s simply a matter of time.

No coalition of special interests exists to save America from California’s fate. It will take individual, patriotic Americans, joining together to challenge every premise of the Left, recognizing that immigration, housing prices, and homelessness are interrelated problems, caused by the same cast of special interests, and symptomatic of a more general totalitarian threat to our freedom, our prosperity, and our national identity.

America • Cultural Marxism • Democrats • Education • Obama • Post • Progressivism • taxes • The Left

Socialists Don’t Really Believe in Socialism

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Can we dispel, once and for all, the idea that socialists, “democratic” or otherwise, actually believe in the socialism they peddle?

“Socialists” love money, guns, walls, fossil fuels, Amazon, meat, private jets and cars, luxury apartments, and paying low taxes just like everyone else.

What sets “socialists” apart is a certain desire for control.

Senator Bernie Sanders (I-Vt.) owns multiple houses, has a seven-figure net worth, and collects a salary of $14,500 a month. Do you really think a guy like that truly believes the “free stuff” balderdash he’s regurgitated for decades? He admires Fidel Castro because he wants to be like him, and he’s enamored with bread lines because Sanders knows that government dependency is a helluva drug. I’m reminded of this every day when I look at the Union of Soviet Socialist Republics rationing ticket from my wife’s childhood in Poland. Newsflash: neither Lenin nor Stalin believed in socialism, either. They believed in power.

Representative Alexandria Ocasio-Cortez (D-N.Y.) wasted no time getting a fancy pad in a tony Washington, D.C. neighborhood. Rumor has it the building’s energy sources are electricity and oil. Aaahhh, first-world living in Washington, D.C., where average monthly rents are higher only in 10 other cities across the globe. Higher taxes? Ha! Ocasio-Cortez’s mother just moved from New York to my home state of Florida to reduce her property tax bill. Hope she didn’t bring her daughter’s politics with her.  

As for President Obama, you aren’t still duped by his “fundamental transformation” schtick, are you? Barack and Michelle may not have a wall around their $8.1 million mansion, but I assure you there are many scary-looking bodyguards armed with scary-looking guns. And you better believe their guns are loaded and carried in “gun-free zones”—which are perhaps the stupidest thing in the long and illustrious history of stupid things.

I have no idea how much the Obamas’ down payment was, but if it was 20 percent, then their monthly mortgage bill is about $45,000. Redistribution of wealth! But just don’t redistribute the Obamas’ money, I guess.

Speaking of “needs”: “socialists” are always demanding to know why law-abiding AR-15 owners “need” 30 rounds in the magazine, but I want to know why the Obamas need nine bedrooms and 8,200 square feet. If the answer is, “none of your business,” then apply the same answer to the AR-15 question.

Speaking of New York, even their governor, Andrew Cuomo, knows capitalism is infinity plus infinity superior to socialism. Cuomo recently asked Amazon to reconsider opening its second headquarters in Long Island City, after the company rescinded its decision due to the political backlash from AOC and others. Talk about pouring teeth-chattering icy cold water on socialism; why would Amazon CEO Jeff Bezos—on any given day the world’s wealthiest person—do business with a city that refuses kiss the ring?

Bezos, who also owns the Democrat-Media Industrial Complex colluder and conspirator Washington Post, is the latest liberal billionaire to be cannibalized by his party’s anti-business and anti-free markets cult. This is the irony of ironies: the Democratic Party, not the Republican Party, is the party of affluent, privileged, mostly white Democrats. Bezos must have wanted his second headquarters in a city that boasts the most billionaires of any in the world. The man also has a multi-billion-dollar divorce settlement coming, so I’m certain he wants to sell more than the usual quantities of used books, Asian old man wall decals, and toilet nightlights (in all seriousness: this last item is much more practical than it’s given credit for).

Jeff, come to Florida; we’ll be happy to have you. But, as a “socialist” would say, NIMBY—not in my backyard.

Here’s How To Defeat Socialism
It’s no coincidence that an alarmingly large segment of the American electorate—especially Millennials and their younger siblings—is now going steady with socialism.  

Americans ages 18 to 29 are more positive about socialism (51 percent) than they are about capitalism (45 percent). This represents a 12-point decline in young adults’ positive views of capitalism in just the past two years, and a marked shift since 2010, when 68 percent viewed it favorably. Factor in the projected demographics of the next three decades, and the insatiable socialist hydra is poised to keep growing.

Socialist donkey dung sells well in a low-thinking population. It’s not our kids’ fault, though; it’s our fault.

We’ve got millions of socially engineered dopes whose brains have been turned to mush by Ludovico-esque indoctrination in our culture, the DMIC, and especially by the U.S. public education system. The shaping of malleable minds doesn’t begin in college; it begins in elementary school and continues through middle and high school; higher education is just the higher-priced socialism re-education camp.

The “free college” ploy is evil genius; college debt hovers around $1.5 trillion, in large part due to the fallacy of “college as a right.” Once something becomes a “right,” our tax dollars are thrown at it ad infinitum. Note to “socialists” out there: when money is thrown at something, inflation sets in, and costs surge. It’s not budget cuts that have resulted in millions of Americans in hock; it’s a deliberate, unsustainable excess of public monies, which have driven public and private college expenditures upward . . . and upward . . . and upward.

To defeat socialism, may I suggest that we immediately cease labeling Millennials and Generation Z as “stupid”? They’re actually quite intelligent, and while I’m not fully letting them off the hook for being the dumbest group of smart people ever, now’s the time for those who give a damn about the wellbeing of our youth to have our “come to Jesus” moment, and recognize that Democrats always prey upon our kids.

If we’re willing to engage them, ask them specific questions that nakedly expose socialist hypocrisies, as well as the history of mass murdering and mass suffering socialist regimes, I predict something pleasantly surprising will happen: our youth will again learn to love capitalism, liberty, and realistic solutions to our many challenges. That’s re-education I am willing to support.

Photo credit: iStock/Getty Images

America • Congress • Conservatives • Democrats • Donald Trump • Economy • Government Reform • Post • taxes

Own the Libs, or Let the Libs Own Us?

Brandon Weichert, whose excellent writing has caught my eye for a while now, exhibits his worthy independence from party orthodoxy with his article on Monday asking: Why not tax the rich more? Weichert’s instincts here are good, but as a wizened old-timer (you may call me Obi-Wan), let me sweep back my gray robes and say: slow down with that tax-power lightsaber, young Padawan!

I share Weichert’s view that President Trump and the GOP missed a great opportunity when it disdained Steve Bannon’s proposal to raise marginal tax rates by 5 percent on incomes over $5 million. In fact, I am tempted to reply—I was there first!

In 2011, I wrote an article for the center-left Breakthrough Journal arguing that “modernizing conservatism” required rethinking the categorical conservative opposition to tax increases. You can imagine the negative reaction! I got called names. Unpleasant names. Also accused of bad motives. Joseph Bast of The Heartland Institute said I was merely trying to preserve my Georgetown Cocktail Party privileges, somehow missing the news that I had left Washington. (For the record, by the way, in my 15 years in Washington I only attended four Georgetown cocktail parties. They are way overrated. Parties in Kalorama are better, or were until Obama moved there.)

My case was simple and straightforward: the old strategy to “starve the beast” with tax cuts had failed. I was persuaded by some good empirical evidence (“empirical evidence” is not always an oxymoron) by several sound conservative economists that tax cuts, in fact, had backfired as a means of imposing spending restraint. Americans got used to receiving a dollar’s worth of government for only 60 cents of taxes (for many people, close to zero cents of taxes).

Now, I argued, we ought to consider a strategy of “serving the check”: if Americans were made to pay for all the government they receive, they might want less of it. We’re already seeing a glimpse of how this might work: residents of high-tax blue states are just now starting to realize the effect of losing the state-and-local-tax deduction (SALT) from the Trump tax reform, which was my favorite part of the Trump bill, and the deserved cost of Democratic intransigence. (Scuttling the elimination of SALT was the primary Democratic demand of the 1986 tax reform talks with Reagan, and they got it easily. The imperatives of #TheResistance in 2017 meant they couldn’t deal with Republicans, so now blue states are taking it in the neck. I call that “winning.”)

Everyone Pays
I am still convinced of the essential logic of supply-side economics, but Weichert is correct that the supply-side prescription was suited to another time and place, namely, 70 percent income tax rates and 50 percent capital gains tax rates at a time of high inflation that made these tax rates 
de facto wealth confiscation.

The role of inflation in the supply-side story is forgotten these days, if it was ever understood clearly in the first place. Tax cuts in 1981 were an essential anti-inflationary policy, though the conventional Republicans of the day (cough cough Bob Dole cough cough) had it exactly backwards. That is not the world we live in today. And I don’t think the difference between a 35 percent top income tax rate and a 39 percent income tax rate is the difference between economic nirvana versus economic ruin. It’s not 1979. (Thank God. I hated disco, the Bee Gees, bell bottoms, and leisure suits. Young Padawan Weichert, you have no idea how good you have it.)

“Serving the check,” however, requires taxing everyone, not just the super-rich. This is true not just on political grounds but on fiscal grounds as well.

Repeat after me: the middle class is where the money is. And just here is the hazard for the Weichert Tax Plan. A tax curve that looks like a fallen-over L-shape won’t match up to our drunken spending habits, won’t have the salutary and transformational effect on public opinion, and won’t last for long.

When Democrats say they want to raise taxes on the super-rich, it has always been a cover for raising taxes on the middle class, because even 70 percent income taxes on the rich along with a 2 percent wealth tax on people with more than $50 million in assets won’t begin to raise enough revenue to pay for existing entitlement programs, let alone the long list of new freebies liberals are panting for.

What Scandinavian Socialism Gets You
Here we should take liberals at their word that they aren’t literal socialists, but are only aiming at having us emulate Denmark or Sweden. Fine. Let’s note, then, that Denmark’s top income tax rate of 60 percent kicks in at about $55,000 of income, which is rather less than $10 million. Ditto Sweden. 
Tilt! Add to that the 25 percent value-added tax on virtually all transactions, and you have a tax burden that the middle class in America won’t support.

Denmark and Sweden are fine places, and their people are mostly happy. But Americans aren’t Swedes or Danes. We’re Americans. Disposable income in Denmark and Sweden is quite low. I was stunned on my first visit to Copenhagen a few years ago to see how crappy are the bicycles Danes ride around their bike-friendly city. That is a function of their high taxes. New cars there come with a 100 percent excise tax. Yeah—go ahead, make my day, libs: please propose that here.

This is why it is important to make the libs own the tax hikes to come. If we cooperate or lead the charge, the libs may end up owning us.

Weichert is right that “Wealth in this country has simply become too concentrated in the hands of a very few, mostly leftist globalists.” If I was king for a day, I’d design a tax system that soaked leftist billionaires. Call it a “virtue-signaling excise tax.” Or maybe a “Bonhoeffer Levy”—no cheap grace for leftist billionaires. Every time Google does some stupid intersectional identity politics nonsense, its corporate tax rate should go up by 1 percent.

But that is a hard tax system to design in the real world. Likewise Weichert’s notice of Trump’s forgotten pledge to rein in the “carried interest” tax treatment of hedge funds. The carried interest treatment of hedge fund management fees that covers regular income into lower capital-gains tax rates is arcane enough to defeat targeted fixes but is susceptible to a simple fix that could help the middle class.

The case for a lower capital-gains tax is sound on the merits, but one solution is to treat capital-gains at the same rate as regular income, with one adjustment. If we’re going to go back to 1950s-style marginal income tax rates, why not also re-institute the provisions of the tax code in that era that exempted the first $100 dollars of dividend income (except adjust it for inflation, so make it $5,000 or so today), and likewise exclude something like one-third or half of capital gains from taxation (which is simpler than trying to adjust for inflation), which would also help the small investor and retail saver while limiting the gamesmanship of Wall Streeters.

One other thing: we should insist that Senator Elizabeth Warren’s wealth tax be applied to those huge tax-free hedge funds that run a small college on the side, like Harvard and Yale. Let’s watch the professoriate scream over that. I’m buying popcorn futures. I just hope Weichert won’t tax away all of my easy gains from this obvious trade!

Photo credit: Chip Somodevilla/Getty Images

Administrative State • America • Congress • Conservatives • Democrats • Government Reform • Post • Republicans • taxes • The Media

The Shutdown Proves How Redundant Government Is

The D.C. media complex is not happy with the partial shutdown of the federal government. The government shutdown drags into the New Year, they tell us! It could go on for the rest of January, they cry! “Promise?” is the only thought that readily comes to my mind. It’s actually been quite peaceful with Congress gone and the bureaucracy on furlough.

But to be completely frank, while a complete shutdown of the federal government has some impish attraction both in reality and as a thought experiment, that’s not what’s happening.  Still, if the shutdown extended into say February or March or beyond, how quickly would state and local government pick up the slack? What about private enterprise and community-based organizations? They’re certainly capable of doing so, but it would take some effort.

Though one wonders who would listen in on our phone conversations if the surveillance state were suddenly made redundant? But Christmas was last week, so that’s probably too much to ask.

Yet for all of the breathless commentary from Beltway media, the reality is that the federal government can’t even shut itself down properly . . .

Read the rest at The Spectator USA.

Photo credit: Oliver Contreras/For The Washington Post via Getty Images

America • Economy • Post • taxes • The Culture

America’s Love Affair With Small Business Rekindled

WEST NEWTON, Pa.—Bloom Brewery is the kind of Main Street business that shut its doors a generation ago when shopping malls lured customers to their mega-buildings with well-lit parking lots, extended hours and everything imaginable under one roof.

The brewery, which offers 24 artisanal beers on tap, sits near the Great Allegheny Passage, a 335-mile bike trail that has connected Washington, D.C., to Pittsburgh since 2013. And with it, a new kind of customer is being drawn through its doors, seeking comfort and community instead of big-box discount deals.

“When I first started, we were only open Saturday afternoons,” said owner Jeffrey Bloom, 52. “Now we are open Wednesday, Friday and Saturday, and we are growing all of the time. It’s a real sense of community when you are here, where conversation and good beer are a given.”

When Bloom was scouting different towns to house his brewery, no local officials offered him tax subsidies to entice him here — a sharp contrast to the estimated $4 billion in subsidies that local and state officials offered Amazon in nearby Pittsburgh to lure its second headquarters there. The new HQ was expected to deliver 50,000 high-paying jobs and an economic reboot.

Despite practically being handed the keys to the farm, Amazon ultimately chose to divide its second headquarters between New York and suburban Washington—two of the wealthiest cities in the country—instead.

“There was never a chance they were going to come here,” said Joe Mistick, a former Pittsburgh Zoning Board chairman. “But I’d take a bunch of small businesses any day over Amazon. Their contribution to the fabric of the community is more valuable.”

A growing number of small-business owners are seeing an opportunity to make a comeback. This summer, a National Federation of Independent Businesses report showed that small businesses are growing and adding the most workers per firm since July 2006. At the same time, the Wells Fargo Small Business Index shows optimism among small business owners growing at a historic clip.

And their commitment to the community goes well beyond their business hours. Bloom sits on his downtown revitalization board, attends city planning meetings and creates events to draw people not just to his brewery but to the town itself. And for now, he does all of it while working a full-time day job as a lineman for Verizon.

A new Amazon headquarters would undoubtedly have brought jobs to the Pittsburgh region, but it also would have brought real-estate speculators, gentrification and soaring housing prices. In addition, Amazon’s convenience-through-technology model has caused many of the malls that shuttered Main Street businesses, too. And the bigger companies become, the less they care about the communities they serve.

The 2017 book “Glass House” told the story of Anchor Hocking, a century-old glass tableware company in Lancaster, Ohio, that was originally locally owned. Its corporate leaders served on local community boards. The wives of the leaders were local volunteers. But Anchor Hocking became detached from the city after a hostile takeover in the late 1980s, leading to several bankruptcies and mergers and acquisitions. Eventually, the ownership vanished, and the social capital of the city shrank.

“Larger companies often don’t consider their effects on culture or sense of community,” said Bloom.

Like Bloom, Mary Lou and Rob Rendulic spotted a business opportunity along the Great Allegheny Passage, opening their Bright Morning Bed-and-Breakfast in 2002. As the trail’s popularity surged, so did their profits. Eventually, they purchased the dilapidated homes flanking their bed-and-breakfast, giving them more rooms for guests.

Their booming business has boosted others nearby as well. Rob Rendulic said, “People who stay here also eat at the local pub or rent bikes from the bicycle shop or go to the new distillery across the bridge.”

America has always loved its innovators. From the railroads to driverless cars, they all moved commerce and offered endless possibilities. But they also eliminated jobs and created a dependence on them we didn’t anticipate. Their senseless growth has led to a revolt—even in New York City, where leaders have slammed Amazon’s plans to colonize Queens, taking millions in subsidies while guaranteeing nothing in return.

But with entrepreneurs like Bloom and Rendulic, it’s heartening to see the small-business owners fighting back—one small store at a time.

COPYRIGHT 2018 CREATORS.COM

California • Elections • Post • Republicans • taxes

Requiem for John Cox

In the end, it wasn’t even close.

John Cox, the venture capitalist and housing developer from San Diego by way of Chicago, was the third Republican candidate to lose—bigly—the California governor’s race to a Democrat in as many elections.

Lt. Gov. Gavin Newsom sailed to victory Tuesday, defeating Cox by more than 1.3 million votes (and counting, since the final official tally won’t be available until next month).

By Wednesday morning, Newsom’s margin of victory looked strikingly similar to Jerry Brown’s curb-stomping defeat of Republican Neel Kashkari in 2014. Cox might have narrowed the gap somewhat, but let’s face it: Doing a little better than the last guy is a small consolation.

Cox deserved to do better. He really did.

Read the rest at the Sacramento Bee.

Photo credit: David McNew/Getty Images

America • Economy • Government Reform • Post • taxes • the family

Home Economics: Building an Economy to Strengthen Families

A recurring memory has stayed with me throughout my life. It is the late-night sound of my father limping tiredly up the steps to our house after working another wedding or bar mitzvah, keys jingling until he could find the right one to unlock the front door. The memory is a reminder of the sacrifices he made for our family and a source of motivation for me to follow his example for my own family today.

My father worked as a bartender, and my mother was a maid. And yet the jobs my parents worked provided for a family. Stable employment, even in my father’s service-sector work, paid well enough for my mother to consider staying at home by the time my younger sister was born. They had enough to own a home, raise three kids, and even help send me to college.

Our version of the American Dream was not just the product of our family’s work ethic or the higher living standards measured against my parent’s poorer home country. It was a source of stability broadly made possible for middle-class parents across the country at that time.

My parents came to America in 1956. This was a unique period of family prosperity in the history of our country. The national indicators of a strong and active working-class family life—wages’ share of the economy, marriage and childbearing, and even church attendance—were near all-time highs. There were well-worn pathways to achieving this prosperity, for young men especially, which involved good-paying and stable work.

The Path to Prosperty Has Closed Off
Sadly, this no longer is the case in America. Does anyone think a family with the earnings of a bartender and a maid could lead a comfortable life in today’s economy? From 1966 to 2016, the real median wage earned by men with only a high school diploma—men like my father—declined from more than $40,000 a year to $33,516. Since 1975, the share of men ages 25 to 34 earning less than $30,000 rose from 25 percent to more than 41 percent. And while our country made great progress to reduce hiring discrimination against women, over the past half-century the earnings American families obtained from women joining the workforce were not enough to generate total income growth when the working parents only had a high school degree.

In recent years, this path to prosperity has closed off, leaving many young men and women who do not have college degrees—the majority of the country—to chart their own courses where clear and attainable paths to a meaningful and prosperous life once existed. The cultural image of a stable working-class family life once thought to be the floor has become the ceiling.

One consequence is an ongoing series of no-win situations known well by young parents. Choose to have one parent stay at home, and you can’t afford the house close to your place of work—or possibly afford to buy a home at all. Have both parents work and watch childcare costs cancel out most of one of your income. Take time off of work right after having a new child only to spend less time with them for the rest of their childhood because of the second job you took to pay off the debt from your unpaid parental leave.

Families are stuck in an anti-family race to the bottom in which the “winners” are those who spend the least amount of time with their children.

Catastrophic Trends
Clearly, this is not the life many working American families would choose for themselves. Almost 70 percent of all mothers prefer work situations short of full-time of employment. A majority of working mothers say they would rather stay at home to take care of their families than work outside of the home. Nearly 6 in 10 Americans believe that children are better off when one parent stays at home, and yet only 32 percent of families consist of one working parent and one stay-at-home parent. It should come as no surprise that American families are having fewer children than they would like.

And this is only for families where mom and dad live together, and that doesn’t include the declining number of young men and women who are even having kids in the first place. The collapse of family stability ripples throughout our whole society. A hard, broken national family life reduces the number of families being formed at all, to devastating effect for today’s Americans and unborn generations to come. It has led to an America where the most basic indicators of a healthy society—marriage and childbearing rates—are bottom dwellers. That these catastrophic trends are occurring when the official statistics tell us things should be better than ever before is cause for alarm.

High-Wage Jobs Are Essential
While the explanation for much of the decline in strong families can be attributed to a decline in social values and an erosion of our communities, it can also be the case that a collapse of working-class family incomes aids and abets it. Indeed, as the public polling mentioned above suggests, many families retain traditional beliefs about child-rearing but living them out is becoming more and more difficult. Social conservatives need to understand that right now strengthening the family is as much about empowering parents to make the choices they want for their families as it is to preach what the right choices might be.

To achieve their goals, families need opportunities. In an economy that delivers low wages to its workers—and especially one which has seen a relative decline in the earnings power of its young men—these opportunities are in short supply. There are fewer marriageable young adults and less income to go around to use for time off to raise children or buy suitable homes. A stable home requires stable jobs and stable hours in the region where a family lives.

To re-make an America of stable families, we need an economy that delivers high wages to its workers in all parts of the country. It was with high wages from productive jobs that the Greatest Generation built the domestic prosperity we recall when we remember the 20th century as the American Century. President Trump’s actions against what amounts to Chinese Communist mercantilism are exactly what we need to get things started and undo much of the devastation we’ve seen in American manufacturing. Tax cuts for American businesses to create American jobs and innovation here at home is another. Breaking up a corrupt and elitist view of higher education that looks down on technical work and physical labor would round out an agenda to put America on track for the 21st century.

Creating and building support for an agenda to bring back good jobs is an important task that will take time and hard work, as evidenced by some of the political division even within the Republican Party. This does not mean that the crisis of the American family will wait, though. The Left would absolve the economy of its anti-family biases and address the insecurity of families through increased taxes, welfare payments, and penalizing traditional families for not bending to their progressive social views. This approach would preclude both higher wages and stronger families.

Americans Want to Stay Close to Home
Take, for example, paid family leave. The Left’s idea is to raise payroll taxes on all workers in order to fund a new paid leave benefit. Put plainly, this would be income redistribution from single earner families—the 32 percent of American families with a homemaker parent—who are more likely to be of lower income, to dual-earner parents. Then, after the 12 weeks of leave, they have defined as the appropriate time off in the home, the Left’s approach to helping families raise children is focused on getting parents out of the home. They would subsidize daycare facilities, by paying parents to put their kids into daycare and using government funding to build new daycare facilities.

This defines the liberal approach to family policy: reduce family incomes by raising taxes and then use the revenue from those taxes to subsidize the professional elite’s preferred parenting arrangements. It should come as no surprise, and is no coincidence, that these do not match the preferences of the majority of American families.

This difference does not require fundamentally opposed social views. Adult Americans on average live 18 miles away from their own parents. Many working parents prefer that their children be left with grandparents or cousins instead of professional child care services. Many “stay-at-home” parents only plan to be out of the labor force for just a few years until their kids are of school age. An agenda to reward financially parents who put their children in daycare and take leave from their jobs right after birth—and punish those who do not—is incompatible with these preferences.

The alternative to this imposition of values is to empower families to make their own choices instead of stacking the deck in such a way as to reward only one kind of choice. Making parents decisions for them is characteristic both of programs that push families to do things they otherwise would not, and an economy that prevents families from doing things they otherwise would. Paying parents to put their kids in daycare, and only being able to earn a decent family wage by having both parents work full-time puts families in a trap.

A Host of Policy Solutions
It does not have to be this way. The pro-family alternative to an economy that does not pay family incomes is not redistributing income; it is to build an economy that pays higher family incomes. That means an economy that pays regular Americans higher wages and allows parents to keep as much of their own money as possible while they raise their children.

Building this economy means investing in the productivity of American workers by cutting the tax burden of businesses creating the American jobs of the 21st century, not just those seeking to boost their stock prices. It means making sure American workers and innovators are treated fairly in international trade by making it painful for bad actors, like China, to steal the fruits of our labor. It means getting the millions of “missing men” back into the labor force by rewarding work with our welfare policies, and helping to clear the once well-traveled path to a stable working-class provided by a technical career through accrediting innovative educational products, like vocational degrees.

It also means expanding the per-child tax credit like we started in last year’s tax law. It means enacting a flexible paid parental leave plan that gives parents the option to take some of their own Social Security benefits early after having a new child—including stay-at-home parents who have worked in the past. These measures would make the economy more pro-family by ensuring that when parents start and raise a family they have access to as much of their own money as possible in order to make the choices that are best for their families.

Like most Americans, the memory of the life my parents built, and the future lives I want my children and grandchildren to have, are sources of hope and concern. I’m filled with pride when I think of my father’s late night hours so that he could provide for our family and achieve the American Dream, but I know that the jobs of working-class parents today simply do not pay like they used to do. And, from my own experience with raising four children, I also know that raising a family is more expensive than it used to be. To think that working-class parents might not be able to find the same opportunities to continue the classic American legacy my parents began is a profound source of concern for the future of our country.

Making an America in which my children and relatives can afford to start and raise a family is one of the great challenges we face today. But it has been a great American tradition to rise up to challenges, turn our weaknesses into strengths, and continually restore the American ideals our nation was founded on. We must hope that we can do the same in our time.

Photo Credit: iStock/Getty Images

Administrative State • America • Congress • Donald Trump • Drugs • Government Reform • Healthcare • Post • taxes • Trump White House

The Federalist Capers: The Twilight of Obamacare

The absurd debacle known as Obamacare is not something about which I normally write. However, like a secret vice, I maintain a fascination with federalism and with the nature of the relationship between the feds and the states. Having done professional research into the subject for quite some time, including geeky 10th Amendment matters and all that. OK, it’s kind of dry. But if we don’t pay attention, some of us may have less money for vital necessities like cigars and bourbon. And those I know about. So, listen up.

Also, national economic well-being is a factor in national security. No cash—because it is being spent on awkwardly implemented health care “reform”—no guns.

That’s why it’s interesting that the Trump Administration is proposing a plan that would allow states to expand the use of short-term, limited duration health insurance. Currently, the plans last for up to three months before you can sign up for a longer-term plan through existing Obamacare exchanges. The new rule would permit the short-term plans to last for up to 12 months, and could potentially allow people to renew these plans. Sounds good, eh? Well, as always, the devil is in the details.

The plan has the advantage of introducing market-based reforms and greater federalism into the healthcare system. Proper stuff.

Nevertheless, states shouldn’t exercise their new authority by expanding the use of short-term plans. Because Congress failed to repeal Obamacare last year (thanks again, John McCain!) extending short-term insurance plans would actually increase costs on many in the states. The cost will also increase for the feds given that subsidies from the treasury would increase in kind to account for the rise in premiums on the insurance market. In reality, this means the elves at Fort Knox would have a lot more heavy lifting to do.

Here’s Why Costs Will Go Up
Why shouldn’t the government do what seems to make eminent sense by principle?

For starters, the middle class will see premium increases because they will not be eligible for subsidies if they have to buy Obamacare plans. Particularly in light of Congress’s vote to repeal individual penalties for not having coverage, the enrollment of healthy individuals in short-term policies will mean that coverage costs will increase for those with health conditions.

Okay, you’ve lasted this long with this piece. Now go to the fridge and get a beer, you deserve it.

Waiting . . . 

Now, dear comrades, back unto the breach.

Compared to just 27 percent on the standard Obamacare exchange, 60 percent of individuals purchasing short-term plans in 2017 were between the ages of 18 and 34. These numbers may become even more out of whack next year with the loss of the individual mandate penalty. Many will just opt out of coverage completely. If younger people who need healthcare as they get married (or in my case, divorced) opt out when soon they should be buying houses, having babies, and building their lives, then the burden potentially of paying out of pocket, or landing in a government program, during a health crisis will show in decreased disposable income, purchasing, and a possible economic slowdown.

Economists also predict an 18 percent increase in premiums next year if short-term plans are expanded. For 60-year-olds purchasing silver coverage, the AARP Public Policy Institute projects as much as a $4,000 increase in premiums. That’s a lot of early bird dinners.

And will it affect federal spending? Is the pope Argentinian?

Subsidies from the federal Treasury will increase for rising premiums in the insurance market. A study by Medicare’s chief actuary, that thrill-seeking wildman, found the plan would cost the government $1.2 billion next year and a total of $38.7 billion over 10 years due to subsidies for rising premiums. You can imagine the lovely effect on the federal deficit.

How Much Worse Could It Get? Well . . .
Given that they already lack coverage for essential health benefits such as maternity care, prescription drugs, and mental health, expanding short-term plans could push more people, especially Millennials (as if they don’t whine enough already) into other government-run programs.

Not to mention, as the Kaiser Family Foundation notes, ”Policyholders who get sick may be investigated by the insurer to determine whether the newly diagnosed condition could be considered pre-existing and so excluded from coverage.”

Case in point, from the unexpectantly lucid New York Times:

One case pending in federal court involves Kevin Conroy, who had a heart attack in 2014 and underwent triple bypass surgery, just two months after his wife, Linda, obtained a short-term policy over the telephone. Their insurer, HHC Life, refused to pay the bills.

“We freaked out,” Ms. Conroy said. “What were we going to do? It was $900,000.”

The insurer informed the Conroys the policy was “rescinded,” to use the industry jargon. After poring through his medical records, HCC claimed Mr. Conroy failed to disclose he suffered from alcoholism and degenerative disc disease, conditions he said were never diagnosed. “When one thing didn’t work, they went to another,” Mr. Conroy said.

Oh, joy. The happiness continues. According to the Commonwealth Fund:

The out-of-pocket maximum for each best-selling plan is higher than that allowed in individual or employer plans under the ACA, when adjusting for the shorter plan duration. When considering the deductible, the best-selling plans have out-of-pocket maximums ranging from $7,000 to $20,000 for just three months of coverage. In comparison, the ACA limits out of pocket maximums to $7,150 for the entire year.

So, yeah, a superficially interesting plan now, but it might trap you into a deal down the road when the cost could skyrocket even more than before. Sadly, as with many other things, early gratification can lead to long-term problems. No fun, but there it is.

This administration does a lot of things right. This bit of federalism is one of them. Just the other day, the president made the EU President crawl to Canossa. Good economic news continues to abound, much to the consternation of those who would prefer a return to a pre-industrial state if it would drop Trump’s poll numbers down 5 percent.

But this question requires some fine-tuning at the state level so it doesn’t continue to saddle us with the twilight of Obamacare.

Photo credit: Margaret Johnson/EyeEm via Getty Images

America • Donald Trump • Economy • Foreign Policy • Post • taxes • Trade

The NY Times is Wrong About Trade—So is Everybody Else

President Trump earlier this month told CBS News that the European Union is America’s “foe” because of “what they do to us in trade.” The European Council President Donald Tusk frantically responded:

Many free traders see this as far more than simple rhetoric. Economic historian Adam Tooze took to the pages of the New York Times last week to argue Trump is “deliberately foster[ing] economic nationalism.” In this way, Tooze suggests, Trump is little better than China’s President Xi Jinping or Russia’s Vladimir Putin. How dare they upset the liberal economic order?

Tooze, like all good economic liberals, thinks Trump’s view of national competition is antiquated—and dangerous. How could anyone fail to see the benefits of free trade? “We global” is not just a DJ Khaled album: it’s an affirmation of principle, a statement of fact.

Of course, Tooze’s world is nothing but a dream. It’s time he—and every other free trader—awoke from their intellectual stupor.

The Future is the Past
Tooze argues that Trump’s view of international competition is archaic:

To think . . . of nations locked in mortal economic rivalry shows a grave misunderstanding of how competition actually works . . . If neoliberalism is about anything, it has been about creating the largest possible economic space for competition. But the protagonists aren’t supposed to be states . . . but businesses, investors and workers.

Basically, Tooze thinks nations should cooperate, and leave the competition to individuals. This makes sense, but only theoretically. In reality, most nations are unwilling to simply melt away for the benefit of global citizens—even if this enriches their own people. After all, money is power; and politicians, be they democrats or dictators, are loath to surrender either.

Also, cheaters prosper.

Consider how America imports Chinese goods with minimal scrutiny, while China bars most American companies from operating in China. They do this not because they’re stupid—as free traders imply—but because it works. That is, China gains more from predation than free trade. And it’s not just about the trade deficit. China also steals roughly $400 billion in American intellectual property annually.

Why would China want to trade with America when they can pillage us instead? They wouldn’t. It would be unreasonable.

President James Monroe adumbrated my point in his 1822 State of the Union address: “Whatever may be the abstract doctrine in favor of unrestricted commerce,” the conditions necessary for its success—reciprocity and international peace—“has never occurred and cannot be expected.” Monroe is quite right: “real international free trade” is a unicorn, as rare as “real communism.” Not only has it never existed, but it has always failed when attempted between multiple states.

Heads I Win, Tails You Lose
Tooze’s argument also suffers from a major dialectical flaw: he discusses free trade only on its own terms. That is, his analysis considers how the addition of free trade helps or harms us, but does not consider how the subtraction of protectionism helps or harms us.

Economists often conflate these two distinct questions because of what I call the heads-tails fallacy. This fallacy occurs when people view two systems as opposites, and thus assume that the costs and benefits are zero sum—a benefit on one side of the coin is necessarily a harm on the other. Although this makes intuitive sense, it’s often untrue when dealing with complex systems. Benefits and harms may inversely correlate, but not necessarily. You need to study each “side of the coin” separately.

Tooze—like most liberal economists—fails to look at free trade and protectionism separately. For example: Tooze correctly notes that more integrated economies are harmed by greater risks of economic contagion. Thus, an implied benefit of protectionism must be decreased vulnerability to contagion. This is true.

But Tooze also argues that a benefit of free trade is greater competition between businesses and individuals. Thus, the implied harm of protectionism is decreased competition. But this implication is false, even though it makes intuitive sense. This is why the heads-tales fallacy is so dangerous.

Protectionism actually increases global economic competition.

Economic competition, like biological competition, is multidimensional. Consider the levels of Darwinian pressures imposed on humans: group selection operates at the tribal level, as more successful tribes outcompete less successful tribes; and both kin and individual selection operate within the tribe, that is, more successful families and individuals outcompete the rest. More surprisingly, Darwinian pressures work within our bodies at the cellular level whenever the body engages in autophagy—weak cellular components and cells are destroyed first during a fast.

If biological competition is ferocious and multidimensional, then economic competition is no different. Individuals compete with one another for wealth, as do (successful) families. Businesses also compete. But productive competition doesn’t end with private entities: cities, nations, and civilizations also compete. In fact, this layer of competition may be the primary engine of growth.

For example, the economic and technological explosion in Renaissance Italy was motivated, to no small degree, by largely non-violent competition between cities—glory for glory’s sake. Likewise, the Industrial Revolution was born of Britain’s struggle for survival against France. In this case, necessity was indeed the mother of invention. And of course, the civilizational clash between the West and Soviets propelled man into the space age. This is not to credit government with mankind’s greatest inventions, but we must recognize that competition between peoples—not just people—matters.

To suppose, as does Tooze, that removing national competition from the global economy would somehow increase competition is laughably naive. Can you imagine a biologist arguing that group and kin selection pressures decrease total genetic competition? Of course not. The very thought is asinine—as is the liberal position on free trade.

America’s free traders claim to champion competition while simultaneously crusading to end competition. Meanwhile, they cannot see that China is currently outcompeting them by completely ignoring all their talk of competition. Ironic.

Photo credit: iStock/Getty Images

America • Center for American Greatness • Democrats • Donald Trump • Economy • Elections • Greatness Agenda • Post • taxes • The Left

Good News, Comrades: There’s Bad News Coming!

As ever, the Left accuses its opponents of what the Left is doing. In the latest instance, the Left is always claiming that those who don’t oppose President Trump are putting party above country. But, as ever, the Left, broadly speaking, is the group engaged in exactly the thing they decry.

Let’s examine the Left’s reaction to this week’s terrific quarterly Gross Domestic Product growth of 4.1 percent.

To working Americans, national prosperity is a positive development; consequently, they welcome it.

Not so the Left, when the prosperity is the result of a Republican administration.

Why? Because as noted in previous columns, the Democrats’ hoped for a midterm election “blue wave” won’t trump the “green wave” of economic prosperity. Why return to power a party that, the last time they were in power,  told you the “new normal” is your jobs are gone and economic growth will forever be weak? Talk about electoral gold…

Indeed, the booming economy is especially troublesome for the Left, since it spent the last eight years blaming President George W. Bush for the anemic Obama economy. So, the Left’s first line of rhetorical—and delusional—political attack is to claim this is not Trump’s economy but Obama’s.

Apparently, President Obama is the first president to have spent two terms presiding over a limp economy without any of his disastrous policies to blame for retarding economic growth. Why? Because, per the Left, Obama was too busy ensuring that all his disastrous policies’ resulting prosperity would happen under his successor. What a truly selfless cat!

If this Democrat canard doesn’t float your boat on a blue wave, the Left’s leading in-house newsletter, the New York Times, is here to let you know not to worry, because bad news is on its way. Here’s a sampling from story article, “Why Friday’s GDP Number May Be a Size Too Big”:

Even a number starting with a four, though, will almost certainly be misleading. Several one-time factors—including a surge in exports tied, at least in part, to Mr. Trump’s trade policies—probably combined to pump up growth in the second quarter. Those effects won’t last, and economists expect growth to slow in the second half of the year. Pretty much no one outside the White House thinks a growth rate of 4 percent is sustainable in the long term.

This is the “Good News, Comrades: There’s Bad News Coming” strategy of firing up the base with the hope that the economy tanks. Thus, Times readers at least can breathe a sigh of relief that the prosperity Americans feel may be fleeting. Then—“Thanks, Goddess Gaia!”—this era of Wild West capitalism forcing everyone to work two jobs so, like, unemployment numbers look low is going to end and then, like, government can take money from rich people—who suck—and give it to poor people as a basic income—totally awesome—even if they don’t want to work to earn it. More electoral gold…

But just to cover their tracks, the Left made sure its ultimate “party above country” lie produced another febrile headline the night before the 4.1 percent quarterly GDP number came out. Or did you think Michael Cohen’s recent “revelation” that contradicts everything he’s previously said about the Trump Tower meeting was just a coincidence? Trump is a treasonous Russian stooge! Yep, more electoral gold….

Nonetheless, heading into the midterm elections in the Trump economy, the smart money’s still on the green wave. People know that the Left is rooting for the American economy to tank; consequently, this November, voters are going to put their family’s prosperity and our country over the Democratic Party. So, I suppose, there is good news for America because there’s bad news coming for the Left.

Photo credit: Nicholas Kamm/AFP/Getty Images

American Conservatism • Congress • Donald Trump • Elections • GOPe • Government Reform • Immigration • Infrastructure • Mueller-Russia Witch Hunt • Political Parties • Post • Republicans • taxes

The Paul Ryan Express: Punching His Ticket to K Street

Months after announcing his plans to retire from Congress, why is Paul Ryan (R-Wis.) still Speaker of the House?

It’s hard to imagine anyone less willing or able to lead House Republicans into a must-win November election than this guy. At this point, it’s not clear Ryan even wants his side to win. Joining the disruptive element is not how you cash in after a long career on Capitol Hill.

Keep in mind, Washington’s political economy makes lobbyists some of the best-paid middlemen in the business, a business that likes harmonious predictability. So it’s not surprising that roughly 25 percent of all former members follow the path of least resistance to an office on K Street.

But for a top prospect like Ryan transitioning to the life of a seven- or eight-figure lobbyist is complicated by fallout from what might be called the “Trump effect.”

The congressional brand can only lead to greener pastures as long as it’s not tainted by sustained public criticism. That’s the problem. Attacking the entire political class, including Congress, is how Donald Trump got elected president, and since then there’s been no let-up.

Retiring members used to have little trouble selling their services as honest brokers. Now, thanks to Trump, they’re seen as swamp creatures, no better than the bottom-dwelling lobbyists many want to become.

And that was before the Russia probe, Spygate, and the latest inspector general’s report sent shock waves far and wide. The resulting sense of uncertainty already has some of K Street’s biggest customers downsizing their investment in lobbying. Not good news for Ryan and many of his departing colleagues.

Does anyone really care if lobbyists are having a tough time? Not most Americans. But Paul Ryan does. They’re his constituents. His modus operandi has always been to defend them any way he can.

In fact, the only person in Washington Ryan will not defend is President Donald Trump.  

When asked during the campaign if he would be supporting Trump, Ryan famously replied, “I’m not there yet.” Congress-speak meaning: “What’s in it for me?”

With Trump in the White House, Ryan has made it obvious he’s not backing a president who’s a threat to Washington’s lucrative status quo.

House Intelligence Committee Chairman Devin Nunes (R-Calif.)—doing the work Ryan refuses to do—has been waiting for over a year for the Justice Department to stop stonewalling. What Nunes wants are documents related to the original FBI investigation into alleged Trump-Russia collusion, documents almost certain to prove the accusation completely bogus.

At a recent press conference, Ryan said: “We received an oral briefing two weeks ago. But what we are asking for—and what we require and we expect, is the corroborating documents that back up that oral briefing.”

Then in pleading tones, he added, “Honestly, it’s our job to conduct oversight.”

Ryan could have taken much more forceful measures long ago to compel delivery; true to form he didn’t do anything that might make waves.

October will mark Ryan’s third full year serving as the speaker at an annual salary of $223,500. If he waits to retire until next January, his yearly pension would be $84,930, according to an analysis by Business Insider. If he retires now, his pension would be reduced, but not by much. And it’s not like he’ll need the money.

Is Ryan, 48, who’s spent 24 years working on Capitol Hill, hanging on to the Speaker’s job for an extra few thousand in benefits? Retirement-obsessed Washington bureaucrats do that all the time.

Whatever the case, a groundswell is building in the Republican Caucus to push Ryan aside. Many are hoping it succeeds—and soon.

Meanwhile, every time Ryan makes Trump look bad the opposition media praises him as a decisive leader. It doesn’t take a political scientist to see he’s just the opposite. Ryan has been a total failure as House Speaker. He’s a careerist, who never says or does anything that involves the slightest risk.

Compare him to Nunes, who’s been relentless in his pursuit of high-level wrongdoing in the Justice Department, FBI, and elsewhere, while Ryan pretends not to notice.

As for swamp draining, don’t look to Ryan for any parting instructions. With six months to go before the current Congress reaches his “sell-by” date, Paul Ryan has already shown what he’s worth.

Photo credit: Alex Wong/Getty Images

America • Department of Homeland Security • Donald Trump • Economy • Foreign Policy • Government Reform • Greatness Agenda • Immigration • Post • taxes • Technology • The Left • Trade

Remittances: Illegal Immigration’s $30 Billion ‘Hidden Tax’

Paris. The year is 1788. The air is heavy with the scent of impending revolution. Some praise the king in hushed whispers, others shout “Liberté! Egalité! Fraternité!” in the streets. Either way, the time for talk is over. How did it get to this point?

The hopeful specter of radical liberalism played its part, as the father of modern conservatism Edmund Burke observes in his masterpiece Reflections on the Revolution in France. But most men aren’t dreamers. Most live parochial lives and think parochial thoughts—there’s no time to dream when you’re working to put bread on the table.

For the average Parisian, the revolution was about bread: why should they starve while the king eats his fill? Necessarily tied to this was a broader question: why should Parisians pay exorbitant taxes so that the king can live like, well, a king? This is a good question, one which the French answered (regrettably) with blood.

As bad as the Parisian tax regime was, at least everyone knew they were getting taxed. Nowadays, many of our biggest taxes are hidden, disguised as “user fees” or “mandatory contributions.” Think Obamacare or Social Security contributions. Likewise, at least money collected in Paris tended to stay in France, employing French harlots and French maestros. It could have been worse.

Imagine how mad the French would have been if their taxes flowed instead into the Russian Czar’s Winter Palace, employing Russian harlots and Russian maestros. In the end, paying domestic taxes is always preferable than paying tribute to a foreign land.

Redistribution is bad, elimination is worse.

Therein lies one of illegal immigration’s biggest, yet routinely ignored, problems: illegal aliens hop the border, work (often without paying taxes), and send a large chunk of their earnings back home via remittances. Basically, remittances are a hidden tax Americans pay for the privilege of hiring artificially cheap illegal labor—and it adds up. In fact, illegal immigrants may remit around $30 billion annually.

Finding the Right Ballpark
To be clear, it’s impossible to know exactly how much money illegal immigrants remit annually. There are three reasons for this. First, we don’t know how many illegal immigrants actually reside in America. Second, the term remittance itself is ambiguous: should we include money stuffed in a birthday card in our calculations? Third, we cannot track the location of every dollar even if we wanted to (if we could, black markets wouldn’t exist).

Nevertheless, I think we can apply a set of reasonable assumptions to a reasonable dataset, and reach a reasonable conclusion as to just how much money illegal aliens remit annually—although we cannot hit a home run, we can at least bat in the right ballpark. Let’s step up to the plate.

First, assume that all of America’s remittance outflows are either sent by first-generation legal immigrants or illegal aliens. Next, assume that these two groups send equal amounts of money home per person. Although legal immigrants earn more per capita, they likely send a much smaller proportion of their pay abroad (if they send any at all). I think these are fair assumptions.

Now, let’s apply those assumptions to the numbers. According to Pew Research’s 2018 remittance outflow data, America lost $138.2 billion in remittances in 2016. And given that there are some 40 million first-generation immigrants, and (at least) 11.1 million illegal aliens, this means that there are roughly 51.1 million people sending remittances abroad.

Of course, the number of aliens is debatable: a recent study from Yale University found that there were at least 22.8 million illegals residing in America. That being said, let’s go with the low number for the sake of argument.

Dividing the total remittance outflows by immigrant proportions reveals that illegal aliens likely remit some $30 billion per year. That’s a lot of money. For context, it’s as much as the entire annual GDP of Vermont. And of course, the figure would be higher if we used Yale’s population estimates.

But it’s not just about the money—it’s what’s happening to it. Remember when I said earlier that no matter how bad Paris’s taxes were, at least the money paid for French (rather than Russian) harlots and maestros? Remittances are worse. Every dollar remitted by illegal aliens is a dollar ejected from the local economy, never to recirculate or be reinvested—it goes directly to Russia, or more likely Mexico, China, and Guatemala. This reduces the velocity of money and causes liquidity problems, particularly in small towns.

Functionally, there’s little difference between remittances and federal taxes: taxes skimmed from small towns pools in Washington D.C., while remittances sent by aliens line Carlos Slim’s pockets. It’s that simple. And yet allegedly anti-tax organizations like the Cato Institute routinely argue in favor of open borders, not seeming to grasp the necessary implications.

It’s time we stopped speaking in jargon. Let’s call out remittances sent by illegal aliens for what they actually are: a tax.

Photo credit: Don Bartletti/Los Angeles Times via Getty Images

Economy • Germany • History • political philosophy • Post • taxes • The Left • Trade

Karl Marx, Free Trader

What do David Ricardo, Ben Shapiro, and Karl Marx have in common? They’re all free traders.

No, this is not a tongue-in-cheek jab designed to smear Ricardo or Marx. I’m serious. Karl Marx—the father of Communism, and intellectual progenitor of the horror-show that is postmodern relativism—was a free trader. Why?

Marx believed that international free trade, or perhaps more accurately, Ricardian economic globalization, would pave the way for a glorious proletarian revolution. Specifically, Marx thought that free trade would increase wealth inequality and reduce wages for the majority of people, and that this tension inevitably would lead to conflict.

While I hate to admit it, Marx is broadly right on this point. International free trade has indeed increased wealth inequality and reduced wages for the majority of Americans. In fact, the median American household was richer in the 1980s than today (better technology aside). Part of this is explained by the recent influx of low-wage immigrants and decreasing household sizes—but even so, globalization remains the single largest contributing factor.

Likewise, Marx was correct that increasing inequality degrades social cohesion, setting the stage for violence and revolution. As it turns out, people are not hyper-rational automatons like economists assume: jealousy is real, and most people would rather lose money than see someone else get rich relative to them, even if they would themselves get (slightly) richer.

A Tale of Two Speeches
The primary historical documents showing that Marx supported international free trade are two renderings of a speech he delivered to the Democratic Association of Brussels in 1848—ironically, the “Year of Revolutions.” Although the two versions make basically the same point, they are distinct enough to warrant separate investigations.

The first rendering was published in German by Joseph Weydemeyer, a friend of Marx and Friedrich Engels. This version is probably the more historically accurate and is traditionally appended to The Poverty of Philosophy, which was first published in 1885.

After speaking at length about the injustices of capitalism (to be expected), Marx turns to the question of free trade. He argues in favor of international free trade because he believes it will exacerbate the “antagonism between industrial capitalists and wage workers.” This antagonism (manifested in growing economic inequality) will hasten the worker’s revolution and the final installation of a communist utopia.

Basically, Marx thinks things must get worse before they get better—and free trade will make them worse.

This is consistent with Marx’s teleological (goal-oriented) understanding of history. Marx sees history as a series of clashes between the rich and poor, and each clash brings us closer to the end of history—a communist utopia where such distinctions are erased. For example, ancient Greco-Roman slavery, medieval feudalism, and modern capitalism are all just different versions of this underlying conflict, and each is a necessary step towards Communism. For Marx, history is not simply a chain of causality dangling in empty space: it’s a bridge to a known destination, and this bridge is built by revolution. This teleology is why Marxists are so keen to sow discord whenever possible—conflict is a means to an end.

But it’s not just about economics. Marx sums up his case for free trade with the following passage:

. . .in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade systems hastens social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.

The key phrase here is “breaks up old nationalities.” Remember, Marx does not see Communism as simply an economic system—it’s an entirely new social, political, and economic order that must be wrought on a global scale. Communism is all or nothing. Thus, nationalism is a major roadblock because it unifies and divides people on a dimension other than wealth. In the end, there can be no proletarian revolution unless people see themselves as proletariats—not as Englishmen or Americans—first.

On the whole, this speech reveals that Marx supports global free trade for two reasons. First, by increasing inequality is sows the seeds of revolution. Second, economic integration undermines nationalism and replaces it with a global (proletarian) culture.

Flesh on the Bone
The second version of Marx’s speech on trade (this time from 1847) was published by his friend and patron Engels in The Northern Star, a British journal. What makes this (otherwise inferior) version of the speech interesting is that it contains a direct refutation of David Ricardo’s theory of comparative advantage.

The theory of comparative advantage states that countries should trade things they are relatively good at making in exchange for things they relatively bad at making—even if they are better at making all things in absolute terms. This ensures that labor is divided efficiently, and thus the maximum number of things are made. While comparative advantage sounds good on paper, the theory (like so many other academic speculations) collapses when applied to the real world.

Marx’s refutation turns Ricardo against himself. To begin, Marx assumes that comparative advantage works as Ricardo describes. Next, he states, “labour is a commodity as well as any other commodity.” That is, the price of labor is subject to the law of supply and demand—just like the price of apples or oil. Finally, Marx puts two-and-two together:

We accept everything that has been said of the advantages of Free Trade. The powers of production will increase, the tax imposed upon the country by protective duties will disappear, all commodities will be sold at a cheaper price. And what, again, says Ricardo? “That labour being equally a commodity, will equally sell at a cheaper price”—that you will have it for very little money indeed, just as you will have pepper and salt.

Essentially: if free trade decreases the price of goods, it will also decrease the price of labor. But if this is true, then who actually benefits from free trade? After all, costs are always measured relative to income—if the price of bread halves, but so does your wage, you’re no better off than if nothing changed.

To his credit, Ricardo was actually aware of this problem and proposed that capital immobility would prevent the hypothesized collapse of labor prices. However, in today’s world (and, to some degree, Marx’s), capital is mobile, and therefore comparative advantage doesn’t work. This is one of the rare occasions that Marx was right.

A Hill to Die On
Milton Friedman and Karl Marx both support free trade but for very different reasons. In his book Free to Choose, Friedman argues vociferously that free trade is the key to enriching everyone. Meanwhile, Marx supports free trade for precisely the opposite reason: free trade impoverishes people so badly that they’d rather fight and die in a bloody revolution than live with its consequences.

Who’s right?

As usual, the truth lies somewhere in between. There is no doubt that America has benefited from elements of economic globalization. For example, everyone likes buying fresh strawberries year-round. Likewise, many American industries undoubtedly profit from higher trade volumes—primarily American exporters and financial markets.

The problem is that not everyone benefits. In fact, the vast majority of Americans have seen their wages stagnate—real median wages actually peaked in 1973—and their quality of life deteriorate (better technology aside). Likewise, large swaths of the nation have been turned into ruined, rusting husks, a consequence of deindustrialization. Millions of Americans are chronically unemployed, and millions more have turned to drugs, crime, and suicide.

Free trade is to blame. Or more specifically, Ricardian economic globalization and its ugly stepchild, offshoring. Both the economic logic and historical data bear this out.

If America does not soon redress its trade imbalances, things will only get worse for the common man—inequality will continue to increase, and nations will continue to grow ever more economically (and thus legally) integrated. Do we really want to put the rest of Marx’s thesis to the test?

Photo credit: Universal History Archive/UIG via Getty Images

America • Congress • Deterrence • Europe • Foreign Policy • History • military • Post • Religion and Society • taxes • The Constitution

The Destiny of America

President Coolidge delivered this speech on Memorial Day, May 30, 1923, in Northhampton, Massachusetts.

Patriotism is easy to understand in America. It means looking out for yourself by looking out for your country. In no other nation on earth does this principle have such complete application. It comes most naturally from the fundamental doctrine of our land that the people are supreme. Lincoln stated the substance of the whole matter in his famous phrase, “government of the people; by the people, and for the people.”

The authority of law here is not something which is imposed upon the people; it is the will of the people themselves. The decision of the court here is not something which is apart from the people; it is the judgment of the people themselves. The right of the ownership of property here is not something withheld from the people; it is the privilege of the people themselves. Their sovereignty is absolute and complete. A definition of the relationship between the institutions of our government and the American people entirely justifies the assertion that: “All things were made by them; and without them was not anything made that was made.” It is because the American government is the sole creation and possession of the people that they have always cherished it and defended it, and always will.

Why Patriotic Societies Come to Be
There are two fundamental motives which inspire human action. The first and most important, to which all else is subordinate, is that of righteousness. There is that in mankind, stronger than all else, which requires them to do right. When that requirement is satisfied, the next motive is that of gain. These are the moral motive and the material motive. While in some particular instance they might seem to be antagonistic, yet always, when broadly considered or applied to society as a whole, they are in harmony. American institutions meet the test of these two standards. They are founded on righteousness, they are productive of material prosperity. They compel the loyalty and support of the people because such action is right and because it is profitable.

These are the main reasons for the formation of patriotic societies. Desiring to promote the highest welfare of civilization, their chief purpose is to preserve and extend American ideals. No matter what others may do, they are determined to serve themselves and their fellowmen by thinking America, believing America, and living America. That faith they are proud to proclaim to all the world.

It is no wonder that the people are attached to America when we consider what it has done and what it represents. It has been called the last great hope of the world. Its simple story is a romance of surpassing interest. Its accomplishments rise above the realm of fable. To live under the privileges of its citizenship is the highest position of opportunity and achievement ever reached by a people.

If there be a destiny, it is of no avail for us unless we work with it. The ways of Providence will be of no advantage to us unless we proceed in the same direction. If we perceive a destiny in America, if we believe that Providence has been the guide, our own success, our own salvation requires that we should act and serve in harmony and obedience.

What Set America Apart
Throughout all the centuries this land remained unknown to civilization. Just at a time when Christianity was at last firmly established, when there was a general advance in learning, when there was a great spiritual awakening, America began to be revealed to the European world. When this new age began, with its new aspirations and its new needs, its new hopes, and its new desires, the shores of our country rose through the mist, disclosing a new hemisphere in which, untrammeled by Old World conventions, new ideals might establish for mankind a new experience and a new life.

Settlers came here from mixed motives, some for pillage and adventure, some for trade and refuge, but those who have set their imperishable mark upon our institutions came from far higher motives. Generally defined, they were seeking a broader freedom. They were intent upon establishing a Christian commonwealth in accordance with the principle of self-government.

They were an inspired body of men. It has been said that God sifted the nations that He might send choice grain into the wilderness. They had a genius for organized society on the foundation of piety, righteousness, liberty, and obedience to law. They brought with them the accumulated wisdom and experience of the ages wherever it contributed to the civilizing power of these great agencies. But the class and caste, the immaterial formalism of the Old World, they left behind. They let slip their grasp upon conventionalities that they might lay a firmer hold upon realities. . . .

The main characteristics of those principles from which all others are deduced is a government of limited and defined powers, leaving the people supreme. The executive has sole command of the military forces, but he cannot raise a dollar of revenue. The legislature has the sole authority to levy taxes, but it cannot issue a command to a single private soldier. The judiciary interprets and declares the law and the Constitution, but it can neither create nor destroy the right of a single individual. Freedom of action is complete, within moral bounds, under the law which the people themselves have prescribed. The individual is supported in his right to follow his own choice, live his own life, and reap the rewards of his own effort. Justice is administered by impartial courts. It is a maxim of our law that there is no wrong without a remedy. All the power and authority of the whole national government cannot convict the most humble individual of a crime, save on the verdict of an impartial jury composed of twelve of his peers. Opportunity is denied to none, every place is open, and every position yields to the humblest in accordance with ability and application.

Not Perfect, But Surpasses All Others
The chief repository of power is in the legislature, chosen directly by the people at frequent elections. It is this body, which is particularly responsive to the public will, and yet, as in the Congress, is representative of the whole nation. It does not perform an executive function. It is not, therefore, charged with the necessity of expedition. It is a legislative body and is, therefore, charged with the necessity for deliberation. Sometimes this privilege may be abused, for this great power has been given as the main safeguard of liberty, and wherever power is bestowed it may be used unwisely. But whenever a legislative body ceases to deliberate, then it ceases to act with due consideration.

That fact in itself is conclusive that it has ceased to be independent, has become subservient to a single directing influence or a small group, either without or within itself, and is no longer representative of the people. Such a condition would not be a rule of the people, but a rule of some unconstitutional power. It is my own observation and belief that the American Congress is the most efficient and effective deliberative body, more untrammeled, more independent, more advised, more representative of the will of the people than anybody which legislates for any of the great powers. An independent legislature never deprived the people of their liberty.

Such is America, such is the government and civilization which have grown up around the church, the town meeting, and the schoolhouse. It is not perfect, but it surpasses the accomplishments of any other people. Such is the state of society which has been created in this country, which has brought it from the untrodden wilderness of 300 years ago to its present state of development. Who can fail to see in it the hand of destiny? Who can doubt that it has been guided by a Divine Providence? What has it not given to its people in material advantages, educational opportunity, and religious consolation? Our country has not failed, our country has been a success. You are here because you believe in it, because you believe that it is right, and because you know that it has paid. You are determined to defend it, to support it, and, if need be, to fight for it. You know that America is worth fighting for.

Too Much Class Interest, Too Little Public Interest
But if our republic is to be maintained and improved it will be through the efforts and character of the individual. It will be, first of all, because of the influences which exist in the home, for it is the ideals which prevail in the homelife which make up the strength of the nation. The homely virtues must continue to be cultivated. The real dignity, the real nobility of work must be cherished. It is only through industry that there is any hope for individual development. The viciousness of waste and the value of thrift must continue to be learned and understood. Civilization rests on conservation. To these there must be added religion, education, and obedience to law. These are the foundation of all character in the individual and all hope in the nation. . . .

A growing tendency has been observed of late years to think too little of what is really the public interest and too much of what is supposed to be class interest. The two great political parties of the nation have existed for the purpose, each in accordance with its own principles, of undertaking to serve the interests of the whole nation. Their members of the Congress are chosen with that great end in view. Patriotism does not mean a regard for some special section or an attachment for some special interest, and a narrow prejudice against other sections and other interests; it means a love of the whole country. This does not mean that any section or any interest is to be disproportionately preferred or disproportionately disregarded, but that the welfare of all is equally to be sought. Agriculture, transportation, manufacturing, and all the other desirable activities should serve in accordance with their strength and should be served in accordance with the benefits they confer.

A division of the people or their representatives in accordance with any other principle or theory is contrary to the public welfare. An organization for the purpose of serving some special interest is perfectly proper and may be exceedingly helpful, but whenever it undertakes to serve that interest by disregarding the welfare of other interests, it becomes harmful alike to the interest which it proposes to serve and to the public welfare in general. Under the modern organization of society, there is such a necessary community of interests that all necessarily experience depression or prosperity together.

They cannot be separated. Our country has resources sufficient to provide in abundance for everybody. But it cannot confer a disproportionate share upon anybody. There is work here to keep amply employed every dollar of capital and every hand of honest toil, but there is no place for profiteering, either in high prices or in low, by the organized greed of money or of men. The most pressing requirement of the present day is that we should learn this lesson and be content with a fair share, whether it be the returns from invested capital or the rewards of toil. On that foundation, there is a guarantee of continued prosperity, of stable economic conditions, of harmonious social relationships, and of sound and enduring government. On any other theory or action, the only prospect is that of wasteful conflict and suffering in our economic life and factional discord and trifling in our political life. No private enterprise can succeed unless the public welfare be held supreme.

The Great Economic Question
Another necessity of the utmost urgency in this day, a necessity which is worldwide, is economy in government expenditures. This may seem the antithesis of military preparation, but, as a matter of fact, our present great debt is due, in a considerable extent, to creating our last military establishment under the condition of war haste and war prices, which added enormously to its cost. There is no end of the things which the government could do, seemingly, in the way of public welfare, if it had the money. Everything we want cannot be had at once. It must be earned by toilsome labor. There is a very decided limit to the amount which can be raised by taxation without ruinously affecting the people of the country by virtual confiscation of a part of their past savings.

The business of the country, as a whole, is transacted on a small margin of profit. The economic structure is one of great delicacy and sensitiveness. When taxes become too burdensome, either the price of commodities has to be raised to a point at which consumption is so diminished as greatly to curtail production, or so much of the returns from industry is required by the government that production becomes unprofitable and ceases for that reason. In either case, there is depression, lack of employment, idleness of investment and of wage earner, with the long line of attendant want and suffering on the part of the people. After order and liberty, economy is one of the highest essentials of a free government. It was in no small degree the unendurable burden of taxation which drove Europe into the Great War. Economy is always a guarantee of peace.

It is the great economic question of government finances which is burdening the people of Europe at the present time. How to meet obligations is the chief problem on continental Europe and in the British Isles. It cannot be doubted that high taxes are the chief cause for the extended condition of unemployment which has required millions to subsist on the public treasury in Great Britain for a long period of time, though the number of these unfortunate people has been declining. A government which requires of the people the contribution of the bulk of their substance and rewards cannot be classed as a free government, or long remain as such. It is gratifying to observe, in our own national government, that there has been an enormous decrease in expenditures, a large reduction of the debt, and a revision of taxation affording great relief.

But it is in peace that there lies the greatest opportunity for relief from burdensome taxation. Our country is at peace, not only legal but actual, with all other peoples. We cherish peace and goodwill toward all the earth, with a sentiment of friendship and a desire for universal well-being. If we want peace it is our business to cultivate goodwill. It was for the promotion of peace that the Washington Conference on the Limitation of Armaments and Pacific Questions was called. For the first time in history, the great powers of the earth have agreed to a limitation of naval armaments. This was brought about by American initiative in accordance with an American plan, and executed by American statesmanship. Out of regard for a similar principle is the proposal to participate in the establishment of a World Court. These are in accordance with a desire to adjust differences between nations, not by an overpowering display or use of force but by mutual conference and understanding in harmony with the requirement of justice and of honor.

America’s Desire: Peace and Freedom
Our country does not want war, it wants peace. It has not decreed this memorial season as an honor to war, with its terrible waste and attendant train of suffering and hardship which reaches onward into the years of peace. Yet war is not the worst of evils, and these days have been set apart to do honor to all those, now gone, who made the cause of America their supreme choice. Some fell with the word of Patrick Henry, “Give me liberty or give me death,” almost ringing in their ears. Some heard that word across the intervening generations and were still obedient to its call. It is to the spirit of those men, exhibited in all our wars, to the spirit that places the devotion to freedom and truth above the devotion to life, that the nation pays its ever-enduring mark of reverence and respect.

It is not that principle that leads to conflict but to tranquillity. It is not that principle which is the cause of war but the only foundation for an enduring peace. There can be no peace with the forces of evil. Peace comes only through the establishment of the supremacy of the forces of good. That way lies only through sacrifice. It was that the people of our country might live in a knowledge of the truth that these, our countrymen, are dead. “Greater love hath no man than this, that a man lay down his life for his friends.”

This spirit is not dead, it is the most vital thing in America. It did not flow from any act of government. It is the spirit of the people themselves. It justifies faith in them and faith in their institutions. Remembering all that it has accomplished from the day of the Puritan and Cavalier to the day of the last, least immigrant, who lives by it no less than they, who shall dare to doubt it, who shall dare to challenge it, who shall venture to rouse it into action? Those who have scoffed at it from the day of the Stuarts and the Bourbons to the day of the Hapsburgs and the Hohenzollerns have seen it rise and prevail over them. Calm, peaceful, puissant, it remains, conscious of its authority, “slow to anger, plenteous in mercy,” seeking not to injure but to serve, the safeguard of the republic, still the guarantee of a broader freedom, the supreme moral power of the world. It is in that spirit that we place our trust. It is to that spirit again, with this returning year, we solemnly pledge the devotion of all that we have and are.

Photo credit: Chip Somodevilla/Getty Images

America • Center for American Greatness • Congress • Democrats • Economy • Elections • Post • Republicans • taxes

‘Blue Wave’ Election vs. ‘Green Wave’ Economy

America’s economy is booming—people are working; job growth continues; consumer confidence is soaring; other economic indicators show increasing optimism. All of this a testament to the entrepreneurial genius of the American people who made this remarkable growth possible, especially now that they’ve been freed from excessive taxation and regulations.

Of course, there are some Americans left behind in this economic boom: they’re called the congressional Democrats. It was their party’s candidates who opposed tax reform and the elimination of regulations that have slowed economic growth over the years, probably because they were the ones who had clamored for the regulations in the first place.

Thus, the Democrats’ conundrum: how to create a “blue wave” election in the face of a “green wave” economy?

To date, while tax reform is still in its policy infancy, the Democrats seem to have taken a two-pronged approach to “revisiting” it.

First, the Democrats want to make the middle-class tax cut permanent. (Well, as “permanent” as a statute can be.) Of course, the GOP would love nothing more than to have the Democrats support making middle-class tax relief permanent now.

Ah, but these are the Democrats, after all—the party that never understood that tax cuts spur growing economy and actually increase federal revenues; the party that now apparently rediscovered federal budget deficits and the national debt after eight years of supporting massive government spending during the Obama Administration; and the party that inveterately must attack corporate America (even while taking its PAC money).

So what is the sticking point to making middle-class tax relief permanent now?

In revisiting tax reform, Democrats believe something must be done to address the federal budget deficit and the national debt. Can you say “hiking taxes on corporations”? And, let’s not forget, the Democrats want to drill all American business by resurrecting the onerous regulations the Trump Administration has been repealing steadily.

In sum, the Democrats economic messaging is that, somehow, this roaring economy would be even better if everything that recently was enacted to promote it was repealed—namely, the GOP’s tax and regulatory reforms. But this is the Democrats’ problem in confronting the “green wave,” when Americans’ growing economic opportunities and experiences refute the Left’s socialist policies. Ergo, the Democrats’ economic “policy” is really just a talking point. It is reminiscent of the old Chico Marx line: “Who you gonna believe, me or your own eyes?”

In fact, even if, in the 2018 midterm elections, the Democrats win both the House and Senate, absent a veto-proof majority in both, the elimination of tax and regulatory reform will remain but a talking point heading into the 2020 presidential election. This, in itself, will not help the economy for it guarantees that the specter of returning to the Democrats’ sluggish “recovery” fueled by a plethora of new taxes and regulations is a distinct possibility after the 2020 election.

So, in the 2018 midterms, voters can have the “blue wave” or the “green wave”—but not both. Doubtless, as a practical people never really fond of politicians, the American voters will measure their economic gains by the hearth of home; and the smart money is on the “green wave.”

Photo credit: iStock/Getty Images

Donald Trump • Economy • Foreign Policy • Greatness Agenda • Post • taxes • The Media • Trade

Be Skeptical of This Study Slamming ‘Isolationist’ Trade

A new study shows that “isolationist trade policies” could cut $2 trillion from America’s gross domestic product (GDP) by 2022. Therefore, Nev Elis suggests in The Hill, President Trump’s tariffs will not make America great again—they will make us poor. America would be better off, Elis argues, embracing “internationalism” as its modus operandi.

There are just two problems. Authors don’t always write their own headlines, but in any case, The Hill’s headline is misleading. Second, the study itself is junk.

It is simply not true, as the headline reads, that: “Isolationist trade policies could cut $2 trillion from GDP.”  The study does not claim “isolationist trade policies” would cut America’s GDP. It simply says that America’s GDP would grow faster under an internationalist model than an isolationist model—growth would occur in either case.

Likewise, the study does not equate “isolationism” with economic protectionism—trade policy is just one component of isolationism. As the study notes, isolationism encompasses other policy areas including immigration, defense and security, cybersecurity, and taxation. To attribute the predicted economic malaise to protectionism alone is to distort severely the study’s findings.

In a world where people mindlessly (and shamelessly) share headlines, it’s important to be as specific as possible, or at least clarify any caveats in the article itself. The Hill failed on both counts.

“Take Not the Merchant at His Word . . .”
Aside from its clickbait headline and omission, The Hill reported the study’s findings more-or-less faithfully. The real problem is that the study itself is junk. Garbage in, garbage out.

To begin with, the study was conducted by Zurich Insurance, Ernst & Young, the Atlantic Council, and the Organization for International Investment. The first red flag is who conducted the study. Zurich Insurance is a Swiss-based company. Ernst & Young is a London-based assurance and consulting firm. What are the odds that foreign companies will produce a study justifying policies that disadvantage foreign companies? Not very high. They have everything to lose and nothing to gain.

Next, the Atlantic Council is an explicitly “internationalist” think tank based in Washington, D.C.,.It seems to specialize in peddling Trump-Putin conspiracy theories and advocating pointless foreign wars. It is hardly an unbiased source.

Finally, although the Organization for International Investment is located in Washington D.C., only one American-headquartered firm is represented on its board of directors executive committee; the rest are European. Furthermore, its motto is “global investment grows America’s economy”— that is, foreign investment. Essentially, the OII appears to be a foreign-backed lobby group disguised as a nonpartisan U.S. think tank.

The common thread here is the groups behind this “study” lose big-time if America embraces an America-first regime. Are such entities likely to publish a study favoring protectionism? No. This is why you never see trade unions pamphleteering to eliminate collective bargaining rights, or illegal immigrants campaigning to “build the wall.” This is not to say that we should dismiss the study outright, but we should approach it with an appropriate degree of skepticism.

I’ve said it before and I’ll say it again: Everything you need to know is summed up in the aphorism: “Take not the merchant at his word, but trust only by the skin of his fruit.”

The Myth of the Time-Travelling Economist
The second red flag is the data used in the study.

The only new data the study rely upon was a survey of 497 chief financial officers from 29 different countries, who represent companies with annual revenues greater than $50 million. The problem is only 103 of these companies (just one-fifth) were based in the United States, with the remaining 394 headquartered abroad.

This raises two questions. First, who cares what foreign companies think? Trump should not kowtow to foreign multinationals; he must put America first.

Second, the dataset is far from neutral. Of course CFOs representing foreign companies would uniformly oppose protectionism. After all, tariffs will benefit American companies at their expense. As such, the survey data is of limited value.

The remainder of the study was an analysis based on raw economic data and growth predictions from the International Monetary Fund. From the study:

Using IMF growth projections as a baseline, decreasing openness to trade depresses growth rates—although small, but cumulatively significant. In 2022, for example, the IMF projects US GDP growth to be 1.68%, but in the Isolationist scenario, it would be 1.45%; in the Atlanticist, it would be 1.60%; and the Internationalist, 1.76% growth. . .

This model estimates that, from 2017 to 2022, the Isolationist scenario would generate a loss of $1.5 trillion of cumulative nominal GDP, a loss of $502 billion cumulative nominal GDP under Atlanticism, and a gain of an additional $505 billion in the Internationalism scenario.

The study presents its models’ conclusions with a veneer of certainty—America’s economy will falter unless we sign “free trade” deals with authoritarian dictatorships like China. This is rubbish. Economists cannot predict the future. In fact, Phil Tetlock has shown that economists (and political pundits, investment gurus, etc.) are worse than chance at predicting economic outcomes.

Economists tend to think the economy is a washing machine, governed by simple cause-and-effect relationships—the apotheosis of which is the law of supply and demand. Essentially, they hold that X will cause Y with certainty. This is very wrong.

In reality, X will often cause Y. Sometimes X will cause Z, or Y and Z, or A and B and C, or nothing whatsoever. This is because the economy is a complex system, much like a jungle, a coral reef, or your family’s decennial reunion—who could have predicted that granny would bruise her lumbago after trying to help your little cousin Tommy blow out his birthday candles, who couldn’t do it because his lungs were too weak following the asthma attack brought on by your sister Suzy’s new husband’s prescription ganja “medication”? The cause-and-effect webs in complex systems are infinitely convoluted, and no statistical model will ever be sufficiently precise to account for them.

Another problem is that economic growth is largely exogenous, and therefore cannot be modeled anyway. At best, we can forecast the likelihood of economic growth based on historical precedents and our limited knowledge of economic ecosystems. When we take this time-tested approach, and bathe in humility, our ability to forecast (not predict) economic performance improves dramatically.

In the end, economists and their waterboys (stooges like Ben Shapiro) destroyed America’s middle class and squandered our economic advantage by cajoling America into embracing global free trade. Why should we listen to yet another “study” produced by foreign-backed entities, and based on spurious data, that recommends more of the same? Enough is enough.

America needs to return to the time-tested protectionist policies that made her rich in the first place.

Photo credit: iStock/Getty Images

America • Americanism • Center for American Greatness • civic culture/friendship • Congress • Donald Trump • Greatness Agenda • Immigration • Political Parties • Post • Republicans • taxes • Trump White House

A Tax Cut Worthy of a Worker’s GOP

Republican Congressional leaders are talking about voting on a second tax cut bill later this year. The tax cuts passed last year were made permanent for corporations but will expire in 2025 for individuals. The leaders’ proposal would make the personal income tax changes permanent, too.

This is much too timid. Americans worry that the massive windfalls from cuts secured for corporations will simply go to their shareholders or be shipped overseas. A new tax cut bill should include a provision that encourages businesses to hire American workers. This would both tilt the playing field a bit toward labor when competing for the tax cut dollar and show Americans that their jobs are the GOP’s primary concern.

My idea is simple: give businesses a tax credit for each person legally able to work in America they bring onto the books in a given year. This credit, which reduces the employer’s tax bill on a dollar for dollar basis, would come on top of the current deduction the employer gets for the compensation they pay to that employee.

This could come in many forms. The credit amount could be adjusted up or down depending on how much one wants to spend; one could also adjust the amount of the credit so that an employer receives a bigger credit when he hires someone with a smaller expected annual salary, targeting assistance to the lesser-skilled. The plan could even exclude very large employers, so only small and medium-sized businesses would get the credit. All of those ideas are mere details designed to hold down cost and target help to those who need it most.

The key is that this credit sends a message: jobs for Americans come first.

The sharp reader will be asking a question about now. How, she might ask, would the employer know the worker is really an American or a legal immigrant? That’s a valid point, but it could be addressed by conditioning its receipt upon federal government verification that the proposed employee is in fact a citizen or legal alien. That means employers who want the money would have to participate in e-Verify.

E-Verify is currently voluntary, and consequently most employers never use it. Since there are no penalties for failure to use it, many employers simply take the documents their prospective employees present at face value. Too many of these documents are forged, meaning that people here illegally deceive their employer, who has little incentive to look deeply into the matter given how rarely immigrations agents look into small business hiring. The result: a continuing demand for illegal labor.

This proposed credit would give employers a carrot instead of a stick. Many small businesses cycle through labor during the year and run on small profit margins. Giving them one or two thousand dollars per legal hire would make a big difference to their bottom line. On the margin it would make their lives easier, and therefore, slowly, it would increase the number of jobs taken by citizens or legal immigrants.

Some people might say that many of these jobs are ones Americans just don’t want, but it is more likely that Americans just don’t want those jobs at the wages currently offered when competing with illegals or given the alternatives for which they can qualify in federal or state programs. The credit and business tax cuts would increase the pool of money available to increase wages for citizens or legal immigrants to something they might find attractive. A $2,000 per employee credit, for example, would allow an employer to pay a full-time worker an extra $1 an hour over what could be paid to an illegal immigrant. If that’s not enough, then the employer could use some of that big fat business tax cut which was supposed to fuel employment and growth.

Many orthodox Republicans might howl at this, but think of the position in which it puts Democrats. Democrats complained the corporate tax cuts wouldn’t go to workers; this provision encourages that to happen. Democrats also say they oppose immigration enforcement that break ups families; here’s a way to slowly cut off the funds that allow people to live here illegally to begin with. If they can’t find work, they go home on their own: the law gets enforced without trauma or violence. Unless they want to say that the law shouldn’t be enforced at all, then they have go along.

Donald Trump won because he gave millions of Americans hope again. He told them that they wouldn’t be left behind, that they would have a place in America’s future. His economics was blurry and remains so, but one can always sense that he actually wants Americans working, saving, and building again. Provisions like these put flesh on the skeleton Trump provides and allows us to build a rational economic nationalism open to all. Some supply-siders might ask “why?” but I ask “why not”? Americans want, need, and deserve action like this. It’s time the GOP gives it to them.

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America • Center for American Greatness • Congress • Conservatives • Donald Trump • Government Reform • History • Post • Republicans • taxes • The Leviathian State • Trump White House

Trump Needs a ‘Taxpayer Bill of Rights’

The recent passage of the omnibus spending bill did serious damage to Donald Trump’s presidency. Politically, it harmed his standing with at least half of his base. Thankfully, political crises present new opportunities to make up for past mistakes. And we are still far enough out from the November midterms that disappointments can be forgotten.

Yet the fact is the 2018 midterm will be the election that determines not only how much of Trump’s agenda makes it through Congress, but also whether or not the president is likely to be impeached. So unless Trump wants to replicate the disastrous omnibus spending bill in September (when the government will need another round of spending), he should take account of his recent mistake and learn from it. He should take serious constitutional action.

Beyond a Balanced Budget Amendment
One way he might do that is through a revival of former President Ronald Reagan’s “taxpayer bill of rights.” Such a revival could become an interesting centerpiece of Trump’s political efforts going forward.

Recently, the White House floated the idea that the president wanted Congress to adopt a balanced budget amendment. But perhaps this doesn’t go far enough? Perhaps Trump, in order to regain the full support of his base, should take more drastic steps?

Steven F. Hayward has argued in his history of the Reagan presidency, The Age of Reagan: The Conservative Counterrevolution: 1980-1989, that the 40th president understood all of his great victories might just as easily be undone by his successors if they were not codified in what he called a “taxpayer bill of rights.” Reagan favored a balanced-budget amendment, a line-item veto, a two-thirds vote requirement for any tax increase in Congress, a federal spending cap, and a constitutional ban on wage-and-price controls.

Every single one of these issues is just as relevant today as they were in the 1980s. Further, the country may be ripe for the kind of drastic reform that Reagan could only dream of during the prosperous 1980s. More to the point, Trump should consider: just as he undid much of what President Obama “accomplished” by “pen and phone” a successor might undo much of his agenda in a similar fashion.

Cement the Realignment
While it is true the damage to the debt has already been done with the most recent spending bill, strenuously advocating a Reagan-style “taxpayer bill of rights” today might do more to drain the swamp in the long-term than anything that Trump has managed to accomplish so far. The “taxpayer bill of rights” also would force his successors, regardless of party or disposition, to hew closely to the standard set by President Trump. The passage of even a few points in the “taxpayer bill of rights” could effectively terminate the Left’s grip on the future, and codify the
political realignment that Trump began in 2016.

Think about it: President Trump has governed as the “most conservative” president since Reagan. According to the Heritage Foundation, Trump has effectively accomplished two-thirds of his agenda within the first year of his administration (the omnibus debacle notwithstanding). Trump’s successes have included an unprecedented rollback of the regulatory state; massive foreign policy victories; the embrace of fair and reciprocal trade; the selection of young, constitutionalist judges to the federal bench; and a big, beautiful tax cut. All of these things were badly needed. But, every one of these achievements can—and most assuredly will—be undone by Trump’s successors, just as Reagan’s great victories were ultimately eroded with the passage of time.

The late historian Thomas B. Silver argued Reagan’s presidency failed precisely because he failed to pass the “taxpayer bill of rights”:

Judged by the highest goal he set for himself, Reagan was not successful. It cannot be said that Reagan, in any fundamental way, dismantled—or even scaled back—the administrative state created by FDR.

Hayward contends that had Reagan pushed for the “taxpayer bill of rights” in his first term, rather than toward the end of his second, the country would have been a very different place today. He is likely right.

President Trump has enjoyed great policy victories since taking office. But, these policy outcomes are ephemeral. Plus, Trump is not a technocrat; he is a disruptor.

If the populist revolution is to last longer than Trump’s first term, he cannot replicate Reagan’s mistakes. The omnibus bill is a wake-up call to the president to continue being the bold leader he campaigned to be. Passing a “taxpayer bill of rights” has the potential to ensure that no American leader will ever again forget about the hard-working, American middle-class. Trump’s revolution will be complete only under these conditions.

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Administrative State • Deep State • Department of Homeland Security • Deterrence • Donald Trump • Free Speech • Infrastructure • Libertarians • military • Post • Progressivism • Silicon Valley • taxes • Technology • The Left • The Media

Trump Is Right to Fear Amazon

President Trump’s feud with the shopping giant Amazon is both welcome and overdue. Welcome, because Amazon’s ambitions extend well beyond the monopoly power that Trump has presciently warned about in recent months. Overdue, because while Trump has been complaining about the company since August, his complaints only lately reached the level of alarm that is actually warranted by the rise of the online shopping giant.

And make no mistake, Amazon’s rise warrants both political and economic alarm. The protestations of partisan fact checkers notwithstanding, a few things are obvious about Amazon and its founder, Jeff Bezos. First, as even the fact checkers admit, Amazon does not pay taxes on roughly half the sales that go through it—namely, the sales that take place through third-party sellers.

Second, Amazon gets a special rate from the U.S. Postal Service compared to other companies—an implicit form of favoritism that most definitely advantages the company, seeing as they send about 40 percent of their sales through the mail.

Third, retailers that do not compete with Amazon have had a better time of it economically than competitors that do. Granted, this last point can be chalked up to more than just competition with Amazon, but taken with the other facts, it most definitely lends credence to the argument that Amazon is beginning to become dangerously overpowered in today’s market. Nor does it help Amazon’s case that Bezos is indisputably, and by a wide margin, the richest man on earth.

Further, Trump’s political arguments against Amazon and Bezos carry a particular sting. No other tech billionaire owns a major paper of record with the pedigree of the Washington Post. The closest equivalent is Chris Hughes, who though he once owned The New Republic, sold it in 2016. But even if he still owned it, The New Republic carries a well-known partisan slant and always had a specialized audience. The Post broke the Watergate story. The two aren’t remotely comparable in terms of reputation or influence upon the popular imagination.

So, naturally, Trump’s decision to attack the Post as a “lobbyist” for Bezos has drawn blood, as it should. All the indignation of the paper’s editors aside, It is hard to imagine how the Post could scrutinize Bezos at all, what with it being his money that sustains them. For any paper to have its hands tied in dealing with the richest man on earth is cause for concern, but when their motto is “Democracy Dies in Darkness,” well, it looks even worse.

Nor is it only the Post that Bezos aspires to use to control the flow of information. Indeed, there is one way that President Trump could easily cut off Amazon’s rapidly rising power at the knees, and prevent it from acquiring even more. He could direct Defense Secretary James Mattis not to migrate all the Defense Department’s data to the Amazon Cloud.

The plan to get the Pentagon to migrate its data is something Mattis’s department has been attempting to execute for the past few months, often at the bidding of former Amazon employees. It would probably be the single biggest coup that the shopping giant could pull off, both economically and politically. Economically, it would land Amazon an actual (if also, technically, virtual) monopoly on cloud services, effectively ending the quest for innovation in that sphere. Politically, it would hand them control of all the Defense Department’s top secret data: not exactly a reassuring state of affairs, should Amazon ever decide it wants to punish President Trump or weaken his government. Say, because of a few tweets that tanked their stocks?

So yes, Trump is right to be worried about Amazon, not least of all because the company and its leaders are trying to buy his government out from under him, and to hound him out of that government in the pages of D.C.’s major paper of record. Trump owes it to his convictions and his constituencies to stop the entrenchment of Amazon as the de facto owners not just of online retail, but of the swamp itself.

After all, a swamp controlled by Amazon is a swamp that no one, except Jeff Bezos, will ever have the right to drain. Least of all the American people.

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America • Economy • Energy • Post • taxes • Technology • The Media • Trade

Why Tariffs Will Benefit American Consumers

In a recent piece for the Washington Post, former CNN correspondent Heather Long and her colleague Andrew Van Dam contend that President Trump’s tariffs will hurt Trump voters the most. Their conclusion is unsurprising, as the mainstream media’s raison d’être is to rebuke the president and gaslight his supporters into thinking they have cause to abandon him.

Don’t let them fool you. Tariffs are in America’s best interest, and they will help precisely the people Trump says they will: the working class.

The “Truth” is a Lie
Long and Van Dam argue that tariffs are bad because they increase prices and could cause a trade war. Higher prices are bad for American consumers, and will disproportionately hurt America’s poor “Walmart shoppers,” they contend. This sounds reasonable, but only because it ignores the other side of the equation.

In reality, every consumer is also a producer, and therefore what harms producers invariably harms consumers down the road.

A common sense example illuminates this point. The year is 1993. You work at an automobile factory in Michigan. Life is good—you can support your wife and three kids on a single income. Then President Bill Clinton signs NAFTA, a free trade agreement between Canada, the United States, and Mexico. Suddenly, your factory must compete directly with another factory in Mexico. It’s hardly a fair fight: not only does the Mexican government subsidize American automakers who relocate their factories, but Mexico’s environmental laws are lax, and Mexican workers earn just one-fifth of what you do.

Needless to say, the factory moves to Mexico and you lose your job.

Bill Clinton said NAFTA would make goods cheaper. But they’re not cheaper for you—you don’t have a job. The same is true for everyone else who lost his job. The lesson here is that free trade doesn’t benefit everyone—there are winners and losers. Winners save a minimal amount on their goods; losers lose everything, their jobs, their independence, and their dignity. Since 2001, when China joined the World Trade Organization (WTO) and America’s market barriers fell, we have lost a net 5 million manufacturing jobs. That’s bad, but it doesn’t tell the whole story.

Manufacturing is an anchor industry upon which predicate industries depend. A factory is like an oil field or a mine: it brings wealth into a community, and this wealth supports an ancillary service sector that otherwise would not exist. Hairdressers, waitresses, and accountants depend upon miners and factory workers—not vice versa. The Bureau of Economic Analysis estimates that each dollar of manufacturing output supports $1.48 in additional spin-off output. Therefore, one manufacturing job supports roughly 1.5 additional jobs. This is called a multiplier effect. And no, manufacturing’s multiplier effects are not subject to the broken windows fallacy critique because manufacturing is an anchor industry that generates new wealth.

In fact, manufacturing’s multiplier effect may be even higher. A study from a consulting firm working out of the University of Maryland found that one manufacturing job supports 1.92 additional jobs. Regardless of whether or not we can tether an exact figure to this proposition, the fact remains that when America loses a factory, it doesn’t just lose a factory—it loses an anchor, and therefore everything tethered to that anchor. In the end, those 5 million lost manufacturing jobs likely led to an additional 7-10 million jobs evaporating.

This is part of the reason why America’s unemployment rate is so high: based on data from the U.S. Bureau of Labor Statistics, I estimate that the real unemployment rate is roughly 13 percent, or almost three-times the “official” figure. This means some 23 million Americans are currently unemployed. The trade deficit, and America’s deindustrialization, is largely to blame for these high numbers. Likewise, according to the Federal Reserve Bank, America’s labor participation rate is at 62.8 percent (down 5 percent from 2001, when China joined the WTO). This is the lowest it’s been since 1977, before the age of deindustrialization. Although these feedback loops are well-understood, the free trade brigade (an unholy alliance of media pundits like Ben Shapiro, government bureaucrats, and tenured academic economists) refuse to recognize them. Instead, they demand ever more “free trade” with China’s communist dictatorship.

Life Imitates Art
Back to our story. After three months of searching, you finally find another job, waiting tables at Lindy’s Deli. The pay’s not very good, but at least you have a job—unlike many of your buddies from the factory. A month later your friend Joe gets a job at another restaurant, making even less than you. The same thing happens to Frank the next month. That makes sense: all those unemployed factory workers are competing for jobs, which gives bosses leverage to reduce wages. You’re one of the lucky ones.

Remember when Bill Clinton said that NAFTA would make goods cheaper? Well, they’re not cheaper for you, since waiting tables pays less than building automobiles. Nor are they cheaper for anyone else in your town, since more competition for jobs means lower wages. This brings me to the second lesson: the nominal cost of goods (sticker price) doesn’t matter, what matters is their real cost (how much you can buy relative to your income).

Pretend NAFTA reduced prices in your town by 5 percent, but wages also declined by 5 percent because of offshoring. Now what? An economist could truthfully say that NAFTA benefited American consumers by reducing prices—but that truth is also a lie, since NAFTA reduced wages by the same amount. In the end, NAFTA had no effect on prices in real terms. Bill Clinton was wrong. NAFTA was a sham.

In 2011, an economist at Princeton University found that the average wage cut for those American workers displaced by offshoring was 17.5 percent—and that does not include the millions of people who dropped out of the labor force altogether. Further, the job loss caused by globalization has caused American wages to stagnate. According to data from Pew Research, the median hourly wage in 1973 was $22.07 (in 2014 purchasing power), whereas the median hourly wage in 2014 was just $20.74. Essentially, the median American is economically worse off than he was nearly 50 years ago (technological improvements aside).

The American dream is dying, and free trade is to blame.

Filling the Gaps
Long and Van Dam’s second point is that Trump’s tariffs may start a trade war. Specifically, they note that China is targeting American pork and soybean producers with retaliatory tariffs. Let’s hope we do get a trade war—it may be the only way to force Congress to take Chinese neomercantilism seriously. Nevertheless, Long and Van Dam’s claim is absurd.

To begin with, raw commodities like soybeans and pork are fungible. That is, American pork is indistinguishable from Canadian or Brazilian pork. As such, these retaliatory tariffs would have no effect on American pork producers: the Chinese will simply buy more Canadian and Brazilian pork, and America will sell more pork to Canada and Brazil—we will “fill in the gaps.” Unsurprisingly, America’s hog farmers realize this, and most aren’t concerned. According to a 2017 report in the National Hog Farmer:

China imported additional 3 million tons by the end of April 2017, making it the No. 1 pork importer last year. As a result, Hayes says it kept the European Union and Canada busy while the United States backfilled pork to the remaining countries. “We (U.S.) are getting the benefits of China without actually shipping a whole lot of product there,” notes Hayes.

China will not hurt America’s pork industry with tariffs because pork is fungible. The same goes for soybeans. Long and Van Dam should know better.

Now suppose that China imposes retaliatory tariffs on non-fungible goods, like American aircraft components. Won’t this hurt American producers? Sure. But remember, in 2017 American companies sold China $130 billion worth of goods; meanwhile, Americans bought $505 billion worth of Chinese goods, according to the U.S. Census Bureau. As such, Chinese producers benefit far more from trade than do American producers, and on balance, American producers are actually harmed by trade with China. In the event of a “full-scale” trade war, American producers would benefit by reclaiming American market share more than they would be harmed by losing access to China’s markets.

Likewise, this imbalance gives us leverage over China. Rather than skulking about crying about tariffs, the mainstream media, pundits like Ben Shapiro, and the effete husk that is the GOP should be thinking of ways to use tariffs to force China to pay for the $500 billion in intellectual property it steals from America annually. If China honored America’s property rights—just as we honor theirs—we would actually have a trade surplus. Tariffs can help redress this issue.

America holds all the cards. It’s time we played our hand.

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