Your Socialism is Bad and You Should Feel Bad by Daniel J. Mitchell

I’m tempted to say that statism is sort of like a cult. Proponents of socialism and other big-government ideologies have a dogmatic zeal that blinds them to reality.

For instance, no nation has ever become rich with big government. But that doesn’t stop leftists from advocating in favor of higher taxes and more coercive redistribution.

They are equally capable of rationalizing that economic misery in places such as Greece and Venezuela has nothing to do with bad policy, and you can even find a few zealots willing to defend basket cases such as Cuba and North Korea.

So long as they don’t burn me at the stake for my heretical views, I guess I won’t get too agitated by their bizarre fetish for statism.

But I will periodically mock them. And that’s the purpose of today’s column. We’ll start with this nice comparison between a capitalist grocery store and a socialist grocery store. I have no idea, by the way, if the lower image actually is a supermarket in a socialist country, but let’s not forget that a real-world version of this comparison is one of the reasons there’s no longer an Evil Empire.

But the bad news about socialism is not limited to economic deprivation for the masses.

The system also leads in many cases to totalitarianism (see this article by Marian Tupy, for example).

Venezuela is a particularly poignant example. Once the richest nation in Latin America, it now is an economic laggard and also is a cesspool of oppression.

Which makes this set of images from Reddit‘s libertarian page both funny and sad.

As you might expect, Milton Friedman had some very pointed observations on this topic.

The really good part starts shortly before 2:00. He explains very clearly that socialism is based on force and coercion.

I’ve saved the best for last.

The PotL sent me this collection of risky temptations and it perfectly captures the attitude of many statists. No matter how many times socialism has failed, they never learn the appropriate lesson. It just hasn’t been tried by the right people, they tell us. Or been imposed in the right circumstances.

So they want us to give it one more try, just like a person with no willpower will eat one more bite of chocolate.

Which is the same message you find here, here, and here.

Incidentally, this analysis not only applies to socialism, as technically defined, but it also applies to redistributionism. Which is definitely more benign, but nonetheless produces bad results.

The bottom line is that statism is a recipe for stagnation and free markets are a route to prosperity.

Republished from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

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What Eastern Europe Can Teach Cuba and Venezuela by Daniel J. Mitchell

It appears that Venezuela is on the brink of collapse as it enters the fourth circle of statist hell.

And the death of Cuba’s long-time dictator gives hope that the people of that island nation may soon escape communist tyranny.

Moreover, one certainly hopes that the lunatic leadership of North Korea’s brutal regime won’t last forever.

Let’s cross our fingers that these evil governments will soon lose power. But that’s only the first step. We also need to think about the policies that would enable these nations to undo the damage of pervasive socialism.

We can learn some lessons by looking at the experience of post-communist nations in Eastern Europe, which is a topic I addressed in the latest edition of The Conservative, which is the quarterly magazine published by the Alliance of Conservatives and Reformers in Europe.

I started the article with some broad observations about grim political and economic impact of communism.

Communism was an awful system for people trapped behind the Iron Curtain. The political cost was enormous. Personal rights and individual liberties were sacrificed to protect the power of the state. Human rights were abused, dissidents were imprisoned, and some were even killed. Communism also imposed huge economic costs. Collectivized agriculture, central planning, price controls, and government-run industries were among the policies that resulted in a debilitating misallocation of resources. And because labor and capital were poorly utilized, living standards lagged far behind western nations.

That was the bad news.

The good news is that the Soviet Empire collapsed, the Berlin Wall was dismantled, and democratic forms of government are now the norm in Eastern Europe.

But good news isn’t perfect news. Nations that emerged from the Soviet Bloc are still economic laggards. And if you dig into the latest version of Economic Freedom of the World, a big problem is that post-communist nations have not been very successful in defending property rights and implementing the rule of law.

Establishing genuine capitalism, though, has been a bigger challenge. Part of the problem is policy. And to be more specific, data from the Fraser’s Institute’s Economic Freedom of the World shows that the major difference today between Western Europe and Eastern Europe (nations that were part of the Soviet Bloc) is that the former get much better scores for “Legal System and Property Rights.” Indeed, the average ranking of Western European nations is 20.6 (with 1 being the best) while the average ranking of Eastern European countries is 67.1 (Economic Freedom of the World ranks 159 jurisdictions).

Here’s a graph comparing Western European nations with Eastern European nations.

As you can see, this is an area where Western Europe leads the world. Nordic nations tend to be at the very top of the rankings (thus helping to offset bad fiscal policy in those countries), and other countries in the region also are highly ranked (though a few countries in the region, such as Italy and Greece, don’t get good scores).

Eastern European countries, by contrast, don’t do well. There’s a significant gap when looking at average scores. Indeed, only Estonia ranks in the top 25.

And bad scores in this category are akin to putting a house on a foundation of sand. Other policies may create a house that looks very nice, but it probably won’t last very long on the unstable foundation.

And speaking of other policies, post-communist nations have better fiscal policy than the countries from Western Europe. Or, to be more accurate, they have less-worse fiscal policy.

If you examine the overall ratings for “Size of Government,” Eastern European nations actually are ranked significantly better, with an average ranking of 89.2 compared to 129.2 for Western European countries. This is because tax rates tend to be lower (many former Soviet Bloc nations have flat tax regimes, for instance) and welfare states aren’t as burdensome.

As I already hinted, doing “significantly better” on fiscal policy than Western Europe does not mean Eastern Europe has good fiscal policy.

Indeed, an average ranking of 89 means that most Eastern European nations are in the bottom half of the world.

So while it’s good that some Eastern European nations have flat taxes, that’s not an economic elixir if there are very high payroll taxes, stifling value-added taxes, and onerous energy taxes.

And since the burden of government spending is extremely onerous in Western Europe, it’s hardly an impressive achievement that Eastern Europe ranks slightly higher.

Though there’s one aspect of fiscal policy where the post-communist countries are lagging their neighbors to the west.

…if you dig into the details and examine the various components that determine “Size of Government,” there’s one area where Eastern Europe lags. The numbers for “Government Enterprises and Investment” are better in Western Europe. …In other words, politicians play too large a role in the allocation of capital in former communist nations.

To put that message in blunter terms, there’s too much cronyism in Eastern Europe.

So long as politicians can directly (state-owned enterprises) or indirectly (handouts, subsidies, and bailouts) provide favors and tilt the playing field, the enriching forces of private markets will be stunted.

Which is why I shared this conclusion in my article.

The bottom line is that post-communist nations need to choose genuine capitalism if they want a brighter future for their citizens.

If you want to close with some good news, I did point out in the article that there are some bright spots in the region, especially Estonia, though Poland also has made big progress.

Republished from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

Where is the outrage over the millions of Americans ejected from their jobs?

On April 10, 2017, The New York Times reported: United Airlines Passenger Is Dragged From an Overbooked Flight.

A followup article included this paragraph:

The video of Dr. David Dao, 69, of Kentucky, being bloodied as he was pulled off the flight in order to make room for four United employees has ignited conversation and outrage around the world. The three Chicago aviation police officers who removed Dr. Dao from the plane have been placed on administrative leave.

You may wonder what this news report has to do with the enforcement of America’s immigration laws and the way that our immigration laws have become politicized through the use of a false and pernicious narrative.

While people around the United States and, indeed, around the world, were angered to see a paying passenger physically yanked out of his seat and dragged down the airliner’s aisle and removed from the airliner, so that a “deadheading” United Airlines crew member could take his seat, the media did not delve into the political orientations of those who were upset by this report or the troubling images.

There were no polls asking if political “Liberals” or political “Conservatives” felt differently about the story.

All Americans, irrespective of political orientation, should be similarly united in being outraged about the failures of effective immigration law enforcement that have failed to protect the lives and livelihoods of Americans.

To understand my perspectives, I ask that you consider that today advocates for secure borders and effective but fair immigration law enforcement are generally identified as a position adopted by “extreme Conservatives,” while the media generally identifies advocates for Sanctuary Cities, massive amnesty programs for unknown millions of illegal aliens, as being “Liberals.”

Metaphorically, because of multiple failures of the immigration system and immigration policies promulgated by both the federal government as well as local governments, over the past several decades, millions of Americans have been, in effect, yanked from their desks at their jobs and displaced by foreign workers. This is because corporations were able to game the visa process whereby high-tech American workers have been displaced by foreign workers whose only claim to being “exceptional” is their willingness to work for exceptionally substandard wages under exceptionally substandard conditions — and by foreign students who have been granted authorization for Optional Practical Training (OPT) by USCIS (United States Citizenship and Immigration Services).

The Democratic Party of decades ago was seen as the party of working Americans.  Democratic leaders falsely still insist that they represent hard-working Americans. It is the Democratic Party, however, that has aligned itself with the push to displace American workers with foreign workers.

Today the Democratic Party exploits the economic principle of “Supply and demand” to seek to achieve “wage equality” by forcing highly skilled American workers to compete with ever increasing numbers of lower paid foreign workers to lower wages.

We will delve into this betrayal shortly but the obvious question is why would any American worker support immigration policies that undermine national security, public safety and result in the decimation of the middle class and opportunities for poor Americans, especially among the minority communities to climb the economic ladder out of poverty?

Where is the righteous indignation over this?

America’s immigration laws are utterly and completely blind about race, religion and ethnicity.  Our immigration laws were enacted to prevent the entry and continued presence, in the United States, whose presence poses a threat to national security, public safety and public health and the overall wellbeing of America and Americans.

Members of the news media accused United Airlines of failing to respect the rights of its passengers, yet ignore the far greater insult and damage caused to hard-working Americans by their corporate employers who have not only displaced them by hiring foreign workers, but demand that these loyal, experienced and talented American workers train their foreign replacements if they want to receive their severance packages.

This insanity was reported in the January 25, 2016 NY Times report, “Lawsuits Claim Disney Colluded to Replace U.S. Workers With Immigrants” and in the March 19, 2017 CBS News program “60 Minutes” important investigative report on “How the H-1B visas have been abused since the beginning.”

Nevertheless the overall narrative provided by the majority of news media has focused on the rights of foreign workers, whether they are legally or illegally working in the United States while ignoring the impact this has on Americans.

There is a question that asks “If a tree falls in the forest and no one is there, does it make a sound?”

Perhaps a more appropriate question is, “If a tree falls in the forest and no one is there, how would anyone know that the tree fell in the first place?”

constrution workersWhen journalists fail to report on the plight of American workers and their families, the majority of Americans have no idea about this outrageous betrayal.

The only reason that so many people have become outraged by the forceful ejection of the American Airlines passenger was because the media reported on it.

These failures of the immigration system, it must be noted are, in reality, Immigration Failure – By Design.

Consider that mayors of Sanctuary Cities and other duplicitous politicians have pushed for providing illegal aliens with driver’s licenses because they openly state, these aliens need licenses so that they can safely drive to their jobs- jobs that under our immigration laws, they are  prohibited from doing.

Meanwhile the mainstream media supports these efforts to undermine American workers by referring to foes of effective immigration law enforcement as being “Pro-Immigrant” while branding anyone who would dare suggest that America’s borders must be secured and our immigration laws be enforced from within the interior of the United States as being “Anti-Immigrant.”

There have been precious few reports about how greedy corporate executives have not only shown contempt for American workers but have made it impossible for many Americans, especially young kids living in poverty to succeed by getting entry level jobs to help build a resume to ultimately enter mainstream economic America.
The unholy alliance of politicians, media and such anti-American groups as the U.S. Chamber of Commerce and the American Immigration Lawyers Association (AILA) could not care less about the plight of these American and lawful immigrant workers, and their struggling families, who have forfeited their livelihoods and opportunities for success to foreign workers.

In point of fact, it is the U.S. Chamber of Commerce and other corporate interest groups that have been behind the push to import a virtually limitless army of foreign workers to drive down wages and working conditions.

Not long ago I wrote an article, “The Wage Equality Deception: The veiled attack on the middle class” in which I contrasted the position of then U.S. Senator Jeff Sessions and Alan Greenspan, the former Chairman of the Federal Reserve Bank on the issue of H-1B visas.

Sessions was crystal clear on how these visas undermine middle class American workers either costing them their jobs or their wages.

Greenspan, on the other hand, stated in his prepared testimony when he testified before a hearing on Comprehensive Immigration Reform conducted by the Senate Immigration Subcommittee on April 30, 2009, at the behest of Subcommittee Chairman Chuck Schumer, had the unmitigated chutzpah of referring to American middle class workers as the “Privileged elite.”

Greenspan advocated for the importation of ever increasing numbers of foreign high-tech workers a means of reducing the “wage premiums” paid to high-skilled American workers to ultimately, “… reduce at least some of our income inequality.”

Finally, with the exception of the occasional tragedy of a victims such as Kate Steinle who was, in a manner of speaking, brutally yanked from the bosom of her loving family when she was shot to death by an illegal alien with an extensive criminal history who had been previously deported from the United States multiple times, the thousands of other such senseless deaths each year, attributed to illegal aliens goes largely unreported.

The terror attacks of 9/11, the Boston Marathon attack of April 2013 and the San Bernardino terror massacre all resulted from failures of the immigration system.  Yet many journalists downplayed or flat-out ignored the obvious nexus between those attacks and the failures of the immigration system.

However, when any Americans speak out against the failures of the immigration system, the media and politicians have turned to the tactic of intimidation by bullying and accusing these understandably concerned Americans of being racists, xenophobes, haters and nativists.

The false narrative that has been carefully crafted over a period of decades by the open-borders/immigration anarchists and has become a part of the political landscape to the point where sensible Americans have been convinced of the outrageous lie that the sensible and necessary immigration policies of the Trump administration should be equated with racism, xenophobia and bigotry.

The only bigotry to be found in the immigration debate is the anti-American bigotry of the immigration anarchists.

If anyone should be yanked out of their seats, it is the politicians who refuse to make Americans workers and their families their true priority.

EDITORS NOTE: This column originally appeared in FrontPage Magazine.

The U.N. Has Absolutely No Idea How Economic Growth Works by Daniel J. Mitchell

I’ve been at the United Nations this week for both the 14th Session of the Committee of Experts on International Cooperation in Tax Matters as well as the Special Meeting of ECOSOC on International Cooperation in Tax Matters.

As you might suspect, it would be an understatement to say this puts me in the belly of the beast (for the second time!). Sort of a modern-day version of Daniel in the Lion’s Den.

These meetings are comprised of tax collectors from various nations, along with U.N. officials who – like their tax-free counterparts at other international bureaucracies – don’t have to comply with the tax laws of those countries.

In other words, there’s nobody on the side of taxpayers and the private sector (I’m merely an observer representing “civil society”).

I could share with you the details of the discussion, but 99 percent of the discussion was boring and arcane. So instead I’ll touch on two big-picture observations.

What the United Nations gets wrong: The bureaucracy assumes that higher taxes are a recipe for economic growth and development.

I’m not joking. I wrote last year about how many of the international bureaucracies are blindly asserting that higher taxes are pro-growth because government supposedly will productively “invest” any additional revenue. And this reflexive agitation for higher fiscal burdens has been very prevalent this week in New York City. It’s unclear whether participants actually believe their own rhetoric. I’ve shared with some of the folks the empirical data showing the western world became rich in the 1800s when fiscal burdens were very modest. But I’m not expecting any miraculous breakthroughs in economic understanding.

What the United Nations fails to get right: The bureaucracy does not appreciate that low rates are the best way of boosting tax compliance.

Most of the discussions focused on how tax laws, tax treaties, and tax agreements can and should be altered to extract more money from the business community. Participants occasionally groused about tax evasion, but the real focus was on ways to curtail tax avoidance. This is noteworthy because it confirms my point that the anti-tax competition work of international bureaucracies is guided by a desire to collect more revenue rather than to improve enforcement of existing law. But I raise this issue because of a sin of omission. At no point did any of the participants acknowledge that there’s a wealth of empirical evidence showing that low tax rates are the most effective way of encouraging tax compliance.

I realize that these observations are probably not a big shock. So in hopes of saying something worthwhile, I’ll close with a few additional observations

  • I had no idea that people could spend so much time discussing the technicalities of taxes on international shipping. I resisted the temptation to puncture my eardrums with an ice pick.
  • From the moment it was announced, I warned that the OECD’s project on base erosion and profit shifting (BEPS) was designed to extract more money from the business community. The meeting convinced me that my original fears were – if possible – understated.
  • A not-so-subtle undercurrent in the meeting is that governments of rich nations, when there are squabbles over who gets to pillage taxpayers, are perfectly happy to stiff-arm governments from poor nations.
  • The representative from the U.S. government never expressed any pro-taxpayer or pro-growth sentiments, but he did express some opposition to the notion that profits of multinationals could be divvied up based on the level of GDP in various nations. I hope that meant opposition to “formula apportionment.”
  • Much of the discussion revolved around the taxation of multinational companies, but I was still nonetheless surprised that there was no discussion of the U.S. position as a very attractive tax haven.
  • The left’s goal (at least for statists from the developing world) is for the United Nations to have greater power over national tax policies, which does put the UN in conflict with the OECD, which wants to turn a multilateral convention into a pseudo-International Tax Organization.

P.S. The good news is that the folks at the United Nations have not threatened to toss me in jail. That means the bureaucrats in New York City are more tolerant of dissent than the folks at the OECD.

Republished from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

IRONY: Twaddle About the Gender Pay Gap Actually About Women’s Choice

You can find this particular slice of ironic baloney everywhere in liberal ideology. It always raises its fraudulent head during a political campaign because that is when it is most valuable.

Women make 77 cents on the dollar compared to men. Or 79 cents. Or 80 cents. It moves about a little. This is cited as evidence of the ongoing patriarchal oppression that American women suffer under. That’s the claim and that’s the cudgel with which to bash opponents and raise money.

Naturally, running as the XX-chromosome candidate, Hillary Clinton droned on about the gender pay gap on the campaign trail. President Obama, speaking at the 2016 Equal Pay Day, said, “Today, the typical woman who works full-time earns 79 cents for every dollar that a typical man makes.” Of course everything with Obama was about systemic discrimination, even when neither the specific system nor the specific discrimination could be identified.

The media duly “reports” the gender pay gap myth, and it is repeated with great dramatic flair by  endless streams of intellectually isolated celebrities. The picture with this article represents hundreds of such memes playing on the uninformed and not the reality.

Equal Pay Day is a part of this great political theater. It is in early April and is meant to symbolize how long a woman must work into the next year to make as much as a man from the previous year. Every April, Democrats crank up their reliable demonstration/protest mode to call attention to this terrible injustice in which the American patriarchal system oppresses women.

Democrats even push annually for the Paycheck Fairness Act because, of course, women making personal choices that may result in them making less money is “unfair.” There oughta be a law! (The Democrat solution for every problem.)

The real pudding proof on this fib is that if it were true, money-grubbing capitalists everywhere would be hiring women to save 21 percent on their labor costs. Duh. But of course, that is not happening. Because this is not true.

Why it’s mythological bunk

The thing is, there is actually no evidence of discrimination here. Even liberal economists cannot find it. It is simply rendered as true, and millions of people swallow it and react angrily at the wrongdoing. But there’s nothing wrong.

Here’s how this hokum is produced:

Using the most generalized data set from the Census Bureau, you take full-time working men’s median annual earnings and full-time working women’s median annual earnings and you find that, on the broadest of averages, there is a pay differential of 20 to 21 cents. That’s it. No glaringly obvious variables. No common sense applications. Just the two rawest data points because part of every feminist assumption is that men and women are exactly the same.

And then conclude discrimination.

But without an ounce of research from smart folks — who we’ll get to in a minute — anyone giving it actual thought knows that men and women approach jobs and careers differently when marriage and children are in the equation. A mother is likely to take time off from work, oftentimes months or even years. She will frequently seek out part-time work or jobs with flexible hours because her maternal drive prioritizes the time needs of her children. The man’s paternal drive prioritizes providing for the entire family.

Obviously, that puts those women — in the millions — at a slower career growth pace and therefore earning less than men. That pulls down the average woman’s pay and that is all the gender gap looks at. That is one huge variable that falls under the category of freedom.

We also know from observation that women tend to choose lower wage careers such as teachers and nurses while men tend to choose higher wage careers such as engineering and MBAs. That too drags down women’s salaries compared to men’s and as we will see, these variables explain almost the entire difference. And all of them fall under what one might call “a woman’s right to choose.”

Not discrimination.

It could be argued in the broadest terms that women’s career choices are more noble than men’s — if they must be compared — because they often involve serving others while men’s often involve building things. But the liberal feminist ideology clings to the pay gap myth because every movement needs an enemy, and for the feminist, that enemy is men.

Women choose children over careers

The first obvious variable is most women do double-duty as moms, and this impacts their careers and long-term earnings. Most women also find this an acceptable trade-off, hence they choose it. Secondary to this one is that women tend to be the primary caregivers when elderly parents need it. Both obviously affect careers and earnings.

Instead of going deeply into the numbers that back up all this common sense, and they are legion, let’s use the conclusions from those numbers of two liberal, feminist, Ivy League academics.

Claudia Goldin was the first tenured professor of economics at Harvard University in 1990. Goldin has done extensive research on the issue of women in the workforce and concludes almost the entire gap deals with women’s choices.

“Some of the best studies that we have of the gender pay gap, following individuals longitudinally, show that when they show up right out of college, or out of law school, or after they get their MBA — all the studies that we have indicate that wages are pretty similar then,” she said on the Freakonomics podcast. “But further down the pike in their lives, by 10-15 years out, we see very large differences in their pay. But we also see large differences in where they are, in their job titles. And a lot of that occurs a year or two after a kid is born, and it occurs for women and not for men. If anything, men tend to work somewhat harder.”

So it is the choices women freely make.

Princeton public-policy scholar Anne-Marie Slaughter wrote in “Unfinished Business” about what she called the “care penalty” as the primary driver of gender pay inequity. Understand, she does not like this or even think it right, but she also does not find gender pay discrimination in the workforce. Slaughter wrote:

“If you take women who don’t have caregiving obligations, they’re almost equal with men. It’s somewhere in the 95 percent range. But when women then have children, or again are caring for their own parents or other sick family members who need care, then they need to work differently. They need to work flexibly, and often go part-time. They often get less-good assignments because their bosses think that they’re not going to want work that allows them to travel, or they’re not going to be able to stay up all night, or whatever it is. And so then you start — if you’re working part-time, you don’t get the same raises. And if you’re working flexibly your boss very typically thinks that you’re not that committed to your career, so you don’t get promoted.”

I’m purposely choosing liberals and feminists who have studied this, but are approaching it academically, not for its raw political value. Neither Goldin or Slaughter necessarily approve of this reality in women’s choices, and encourage women to change their decisions and even believe in programs directing them to. But their conclusions are rock solid.

It’s not discrimination. It’s women’s choices.

Women’s choose serving careers

Looking at the spread of career choices, something becomes obvious. Women tend to take lower-wage jobs that often involve serving others while men tend toward higher paying jobs that involve creating things.

A Georgetown University study on the income values of different college majors showed that nine of the 10 most lucrative majors  — such as petroleum engineering, naval architecture and aerospace engineering — were dominated by men. At the same time, nine of the 10 least lucrative majors  — such as education, social work and early childhood education — were dominated by women.

Well this is a sticky wicket, because women are not choosing rightly for the feminist social engineers. American Progress, a large, influential liberal think tank, suggests women aren’t really making these career choices but that the patriarchy “trains” them to think certain ways. American Progress writes:

“…there are several factors that lead women to traditionally female-dominated roles, including the gendered socialization that trains girls from childhood to embody the sorts of traits that translate well into traditionally feminine jobs centered on nurturing, service, and supporting other people in their jobs.”

This seems particularly insulting to women as it suggests they really are not making good choices — by the tens of millions. They are being tricked by wily men. And it further suggests that there is no natural nurturing in a woman, only what a patriarchal society inculcates in them.

This reflects a total detachment from reality that continues the thread that most women are not naturally more nurturing and caring of others but that that is a societal construct.

The reality is that women are different from men inside and out and they therefore frequently make different choices. In fact, for a culture to be strong, that is a necessity.

But the feminists despise that reality and will always work to change it. And because that is reality, there will always be a “gender pay gap” for Democrats to exploit come election time.

And really, that mixed with social engineering is the whole point of it.

EDITORS NOTE: This column originally appeared in The Revolutionary Act.

CAPITALISM: The Shockingly Successful War on Poverty

Counter to practically everything you will read or watch in news coverage, it is the philosophy of conservatism and the practice of capitalism that has done the most to pull millions of people out of poverty.

News coverage tends to focus on the government programs aimed at helping the poor. Some of these include Medicaid, food stamps, WIC, housing assistance, nutrition assistance in schools, for adults and for the elderly — basically cradle to grave safety nets and more. Spending on these, cuts to these, effects of cuts to these, all dominate news coverage, with media organizations making a beeline to find an example of an individual who might be hurt if a cut is made.

These massive anti-poverty programs that, combined, are larger than the entire national budgets of almost every country in the world, provide mere stopgap measures at best. At worst, they create a highway for generational dependency on government largess that strips people of all hope of pulling out of poverty and creating a brighter future. They are taught to be content drifting along the bottom of society.

There are better ways, proven again and again and again, but they are ways that involve politicians and organizations getting out of the lives of people. That dilutes their power, influence and political longevity. And these better ways involve the mass media understanding the basic principles of capitalism and freedom — principles that seem lost to most journalists.

More freedom, more capitalism, better living

Capitalism gets a bad rap on the left, particularly in the fevered safe spaces of academia, because it will inevitably make some people astonishingly wealthy. All boats are raised, but some soar, creating inequalities. In their ivory tower minds filling the young, mushy minds stuck in their classrooms, academicians see capitalism as tycoons and robber barons,  pollution-belching smokestacks and sweatshops — all heaved on the backs of the Charles Dickens-like poor.

They don’t see Apple and Google and Ford and Merry Maids and Publix and Super Cuts and Starbucks and the millions of small businesses making almost everyone’s lives better — starting with their employees, but including their products.

At the turn of the 20th century, we were riding in horse-drawn buggies, using outhouses and being warmed by fireplaces. There was no air conditioning and no screened windows. Our diets were often not healthy, particularly through the winter months. Today, a mere historical blip in time, most families own two cars, live in climate-controlled houses multiple times larger than previous generations, enjoy flat-screen TVs, stream shows on-demand, use smart phones, eat all the fresh food we want and work less.

Not one iota of this improvement in living that the cloistered university professors enjoy came from income redistribution schemes. Every bit came through capitalism in some form.

The fact that capitalism breeds income inequality for the feverish folk who worship at the altar of equality overshadows what it actually accomplishes for the poor. And as journalists are fellow-travelers with just a lower-grade fever, they tend to just look at the microscopic aspect and miss the big picture, not realizing that you cannot have capitalism without income inequality. It’s just part of it. To change that means eliminating capitalism and its overwhelming benefits — not least of which, to the poor.

Capitalism in the free market

When capitalism is unleashed, it’s a beautiful thing — if you don’t mind some boats being lifted higher than others on a tide that is lifting them all.

Many will point to the problem of greed in capitalism. But greed is a problem with human nature. As is envy. Capitalism works because it takes advantage of the good, the less good and the bad in human nature.

The good in human nature is the creative, inventive, problem-solving part that can build anything. The less good is that usually happens only if there is a profit to be made. And the bad is that some of the most financially successful are also the most ruthless and heartless. Human nature.

These human forces however, acting in a sea of free markets of free choices, propel innovations, improvements and efficiencies on a daily basis. Technology layered over top of free markets means that land-line phones become clunky wireless phones become Nokia cell phones become Motorola Razr flip phones become Apple iPhones become…whatever next leap is made.

Whatever that leap is, it will not be brought to you by government or by income redistribution or any other form of socialism.

Examples make the case

Venezuela and Brazil are two examples of what happens when fairly free, capitalistic societies bringing themselves out of the destitute third world see uneven income distribution as their major problem. And that can be particularly apparent in the early stages of successful capitalism, which is where these countries were.

They turned to socialism, which requires government-dictated markets and taking money from the capitalists and giving it to the least productive in dribble amounts. Venezuela went further and faster and has all but collapsed economically. Brazil is also traveling the path and is declining rapidly. This, despite the fact that both of these countries are rich in natural resources the world wants, including oil reserves.

In the other direction, we have the Soviet Union, which left the entirety of its sphere of influence impoverished in places that have since improved the standard of living for their people under a capitalist economic structure.

These include Poland, former East Germany, the Czech Republic, Lithuania, Slovakia — countries that do not have the natural resources of Venezuela and Brazil. Some former Soviet countries have not fared as well, but those also have not embraced the free markets necessary to capitalism.

Capitalism’s shockingly successful war on poverty

Too many people think that capitalism is either irrelevant to poverty or the actual cause of it.

Let’s take New York Magazine writer Jesse Singal, who tweeted out “I actually do think ‘poverty can be solved through capitalism’ is a pretty heinous view. Capitalism is not designed to do that.”

Well, it’s not actually “designed” to do anything. It is simply a system existing upon the reality of the laws of nature and man. And we can demonstrate empirically that Singal is 180 degrees wrong, but very representative of the modern liberal.

So let’s first establish the bona fides of capitalism in lifting people out of poverty. The numbers may shock the reader because they are so rarely disseminated. You’ve been warned.

In 1820, when capitalism began taking hold in some western countries, poverty worldwide stood at 94 percent of the world’s population. As the capitalistic system took hold and grew through the 19th and 20th centuries, poverty plummeted worldwide. By 1981, it was down to 53 percent, according to Max Roser, a fellow at the Institute for New Economic Thinking at Oxford University’s Martin School. But large parts of the world were still under the boot of Communism.

Since 1981, with the fall of the Soviet Union seven years later, capitalistic liberalization in China, expansion of capitalism in Asia and South America and the globalization of the economy, only 17 percent of the world’s population was living in poverty by 2011, according to Roser’s study. (The poverty measurement is based on the monetary value of a person’s consumption in constant dollars. Consumption is a better gauge than raw dollars because a dollar can buy so much more in some countries than others.)

“In the past only a small elite lived a life without poverty,” Roser says. “Since the onset of industrialisation – and as a consequence of this economic growth — the share of people living in poverty started decreasing and kept on falling ever since.”

In another metric that partially coincides with the fall of Communism and completely coincides with the expansion of capitalism, the number of people living in extreme poverty worldwide declined by 80 percent from 1970 to 2006. Extreme poverty in this case is measured by people living on a dollar a day or less, so it is using the raw dollar adjusted value, but still makes the point.

Nearly 27 percent of the global population was in extreme poverty in 1970. By 2006, that was down to 5.4 percent — from more than 1 in 4 people to about 1 in 20. These are astonishing accomplishments, but they get virtually no media coverage and so most people do not know about them. It’s entirely possible that most members of the media are unaware of them, too, as they progressed through socialist-dominated higher education without ever being exposed to these truths.

“It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world,” American Enterprise Institute president Arthur Brooks said in 2012.

But wait, there’s more!

According to Steven Horwitz, analyzing data for the Foundation for Economic Freedom, the world is economically 120 times better off today than in 1800 as a direct result of the explosion of capitalism.

That estimate comes from multiplying the improvement of the average person’s consumption of goods, by the gain in life expectancy worldwide, by seven (the increase in global population.)

Horwitz explains that this has improved the quality of life also in immeasurable ways:

“The competitive market process has also made education, art, and culture available to more and more people. Even the poorest of Americans, not to mention many of the global poor, have access through the Internet and TV to concerts, books, and works of art that were exclusively the province of the wealthy for centuries.”

Further, thanks to capitalism increasing the value of labor while extending lifespans, people now spend a much smaller percentage of their lives needing to work for pay.

Capitalism has even played a critical role in cutting mortality rates in half globally for children under five by both improving medical equipment, medicine and delivery systems. All of those things being used by charitable organizations were created by for-profit companies under the capitalistic system. It’s safe to say this was not happening and would not have happened under the Soviet Union’s government-directed system.

Conservatism undergirds capitalism

So why is conservatism’s philosophy integral to successful capitalism? In short, because conservatism calls for individual freedom, free markets, the rule of law and its enforcement, and the freest trade possible.

Again, liberal writer Jesse Singal demonstrates the thinking of the left. He tweeted that the “whole philosophy” of conservatives is to be mean to poor people. This tied to Trump’s proposed budget that includes cuts to Meals on Wheels.

Actually, this is precisely what horror writer Stephen King thinks. He tweeted that “A Salon headline articulated a question I’ve been asking myself for years: Why are Republicans so mean to poor people?”

This is ignorance on display, but in part explicable ignorance in that probably every media organ that Singal and King imbibe is put out by people of the same liberal worldview and unaware — or unwilling to accept — the facts of capitalism and conservatism’s role.

So let’s look at how conservative principles undergird capitalism and allow it to thrive.

The primary ingredients required to cook up a capitalistic economy include private property, private control of production, accumulation of capital, competition and free markets.

  • Capitalism requires the right to private property. People cannot buy and sell things if they cannot own them in the first place. They cannot accumulate capital if they are not allowed to own something that they can sell for a profit, or others can buy for a need or in hopes of turning their own profit. Conservatism favors protections for private property rights while modern liberalism consistently works to erode those rights.
  • Capitalism requires that private companies and people control production — including land, labor and capital. In a Communist country, the government owns and controls these production factors and sets production levels and prices. Thousands or millions of private companies in capitalism control these production factors to create efficiencies and maximize profit. Conservatism favors limited government involvement and modern liberalism seeks to extend government’s role in virtually every area of an individual’s life.
  • Capitalism requires the accumulation of capital by private enterprises, which provides an incentive to work harder, innovate and produce more so individuals and companies can increase their personal capital. Access to this capital can be made available through banks and investors to other individuals and companies. Conservatism believes in companies and individuals keeping as much of their personal capital (earned income) as possible while liberals believe government should get ever more private money to use on government programs.
  • Capitalism requires competition in industries. Companies compete to provide people with the goods and services they want at the price they are willing to pay. This drives companies to create better and cheaper goods and services — something that a government system simply cannot do. Conservatism and liberalism are similar on this count, with both understanding that monopolies are bad for capitalism.
  • Capitalism requires the free market forces of supply and demand — millions of individuals making billions of decisions in their own interests, driving production amounts and prices. Conservatism believes the free market will generate what people want and need at prices they can afford, while liberalism increasingly believes that government should be controlling these elements.

The future must always be fought for

There are no guarantees that what we have today we will have tomorrow. The quality of life most Americans enjoy — and by all world and historic standards, it is an amazing quality of life right down to poor Americans — we have because of the freedoms we enjoy.

Those freedoms are the foundation upon which a thriving capitalistic economy is built. The abundant American middle class is a result of the freedom and capitalism combination. The extensive infrastructure of roads, airports, parks, schools, law enforcement and so on is built with the money gleaned from capitalism — and by capitalists.

That politicians have misspent trillions of dollars over generations is not capitalism’s fault, nor the fault of the philosophy of conservatism (apart from the Republican and Democratic parties.)

For instance, the more that government takes out of the economy to pay for stuff, the more it restricts access to capital and the slower companies can grow and add goods and jobs.

Liberalism is philosophically fine with doubling our national debt to $20 trillion over eight years. But that is money not available to be loaned to companies. In fact, it’s not available at all. Liberalism always wants higher tax rates on companies. But that too is money that then cannot be spent on expanding and innovating and adding jobs. Conservatism believes in living within financial means and fiscal responsibility, which creates prosperity generationally in part by assuring plentiful capital available to entrepreneurs and businesses.

The case for capitalism improving the quality of life across the board, and reducing poverty worldwide, is undeniable in the data. By understanding the linchpin that is conservatism’s protection of freedoms and individual rights, we can see the way forward to maintaining a strong and prosperous nation, and continuing to be that bright shining city on a hill.

EDITORS NOTE: This column originally appeared on The Revolutionary Act.

Will you share this with just one person?

We are VERY close to reaching the 1.5 million signature goal on the Target boycott. Your help is critical as we approach the one-year anniversary since we launched the boycott.

At the time I send you this email, 1,484,630 people have pledged to boycott Target until it reverses its dangerous policy of allowing men into women’s restrooms and dressing rooms. You can see the very latest count here. Once we reach 1.5 million, I will personally deliver the signatures to Target’s headquarters in Minneapolis, MN.

Just how dangerous is Target’s policy to its customers? Just last month, a man was allowed inside a Tennessee Target store dressing room without any restriction at all.

According to the police report, “the suspect had been in and out of the dressing room for over an hour before he was caught taking photographs of the victim. I [the officer] observed around 5 or 6 other women enter the dressing room during this time, with each time the suspect entering the dressing room and exiting a short time after the females leave.”

Help us reach the 1.5 million signature mark.

Please, please….forward this email to just ONE FRIEND who you think should know that Target allows men in women’s restrooms and dressing rooms. Forwarding it to just one friend will help us reach our goal of 1.5 million pledges.

When you forward it, please consider changing the subject line to a personal note from you. Here are a few samples:

  • Have you heard about what happened at Target?
  • I’m boycotting Target…and you should too!
  • Target is not a safe place for women and children.

Secondly, reach more friends by sharing this on your Facebook page.

Thirdly, if you haven’t signed the boycott pledge, please sign it today!

If our mission resonates with you, please consider supporting our work financially with a tax-deductible donation. The easiest way to do that is through online giving. It is easy to use, and most of all, it is secure.

Tim Wildmon, President
American Family Association

RELATED ARTICLE: The Target boycott cost more than anyone expected — and the CEO was blindsided

On Abundance

Allegory of the Eucharist by Alexander Coosemans, c. 1680 Musée de Tessé, Le Mans

The dominant contemporary “feeling” is that we live in a parsimonious world. Nature is running out of gas. Natural resources are scandalously being “used up,” never to be replaced. Besides, too many people exist on the planet, consuming everything in sight. Species of birds and bugs die out. “Consumerism” knows no bounds to desires. The great enemy of mankind is man himself. He is out of control. Survival prospects for even a small number of gaunt human being are grim. We must act now, decisively, before it is too late.

This doomsday scenario is found in schools, media, governments, churches, and businesses. In the minds of its advocates, its validity is stronger than any faith. To question its tenets approaches blasphemy. Mother Earth is finally unveiled as a cruel goddess. Many find meaning in this collective panic over presumed decreasing resources. It provides an urgent mission. We can now venture forth in a mighty cause to save the world from itself. Evil is now defined not by sins, but by our greedy use of spare resources. Governments are empowered with the welcome task of controlling man by drastically limiting the goods needed for his long-term survival down the planetary ages.

Is there an alternative vision? Why doesn’t the evidence incline us to look at the world’s extraordinary abundance? How is it possible that already so much was available to us for so long? The word “abundance” means overflow, plenty. It comes from the Latin word for wave (unda). When a wave crashes over itself, the sea is filled, full, surging with overflowing waters. The more puzzling thing about the world is not that it contains too little for its purposes, but, astonishingly, way too much, as if it had another purpose in mind.

The initial question is not: “How many resources do we have?” But, “Do we have sufficient and more than sufficient resources for the purpose of our existence on this earth?”

Calculations about what might be needed and what is given have little direct relation to the reason why man exists on this planet. No reason can be found to think that, when man ends his stay on this planet, resources to support him will have run out at the same time

Click here to read the rest of Father Schall’s column . . .

James V. Schall, S.J.

About James V. Schall, S.J.

James V. Schall, S.J., who served as a professor at Georgetown University for thirty-five years, is one of the most prolific Catholic writers in America. Among his recent books are The Mind That Is Catholic, The Modern Age, Political Philosophy and Revelation: A Catholic Reading, Reasonable Pleasures, and, new from St. Augustine’s Press, Docilitas: On Teaching and Being Taught. Launches Global Political Processing Platform

LITTLE ROCK, Ark. /PRNewswire/ —, a political software and payment processing platform, recently integrated its political payment software with Stripe in order to expand its global reach. The integration will allow to open its platform and political software to candidates and committees in 20 countries around the world. It will be the first platform of its kind on a global scale.

The initial countries include United Kingdom, Australia, Canada, Finland, France, Norway, Sweden, Austria, Belgium, Germany, Italy, Japan, Luxembourg, Netherlands, Singapore, Spain, Mexico, Portugal, Switzerland and Hong Kong.

“If there is a political contribution that needs to be made anywhere in the world, we want to run that payment,” said Chris Stewart, CEO of “Our software is built for campaigns, and we are the experts. Our partnership with Stripe allows us to expand globally and give candidates everywhere the ability to receive contributions online and on their Facebook page.”

Headquartered in Little Rock, was founded in late 2013 by Stewart. This past election cycle, the company boasted more than 2,500 candidates on its platform, making it one of the largest of its kind in the United States.

“Donations are the lifeblood of any campaign,” said Cristina Cordova, head of business development at Stripe. “We’re excited to work with to streamline political fundraising around the world.”


Since its inception, has won numerous credible recognition, including Best Political App by Campaigns and Elections Magazine. Founder Chris Stewart was also awarded a 40 under 40 Award for Best Political Campaign Professional by the American Association of Political Consultants. A week after the 2016 presidential election, Chris was featured on a panel discussing New Directions in Digital Politics at the International Association of Political Consultants annual conference in Denver, a conference attended by hundreds of political consultants from all over the globe.

There Is No Such Thing as a ‘Resource Curse’ by Tyler Bonin

The world’s newest country, South Sudan, is suffering one of the worst famines in history, with nearly a million South Sudanese on the verge of starvation, after having suffered through two years of civil war.

South Sudan falls within the bottom quartile of countries in per capita GDP, despite having the third largest oil reserves in Sub-Saharan Africa.

This situation is mirrored in many countries. Economists have given it a name: the “resource curse.”  The “resource curse” maintains that countries with a profusion of natural resources will often suffer from low economic growth, weak democracy, and political violence.  Hence, developing countries with large natural resource reserves are doomed to a perpetual state of conflict and economic stagnation.

Is there any truth to this?

In a recent paper, Peter Kaznacheev argues that the quality of political and economic institutions (defined and measured by such things as rule of law, property rights, size of government, soundness of money, and trade/business regulation) is a strong determinant of economic growth and overall social development within resource-based economies.  In fact, resource-based economies with a high degree of economic freedom have achieved considerable economic growth and social development.

This is currently the case with Chile (the world’s largest exporter of copper), which has withstood commodity price fluctuations to both increase employment and make continued gains in sectors such as education and healthcare. Chile scores high on economic freedom indices.  Compare this with Venezuela, which possesses the world’s largest oil reserves but is suffering severe food shortages and civil unrest; Venezuela falls low on indices of economic freedom.

Freedom Is the Key

So what does economic freedom have to do with political violence?

In the World Bank’s World Development Report, centered on conflict and security, authors surveyed individuals in conflict-affected countries to determine why youth participated in political violence.  They found that “unemployment and idleness was cited as the most important factor motivating young people to join rebel movements.”

Thus, a situation of high unemployment (especially among youth) effectively reduces the opportunity cost of engaging in criminal or violent activity.  This is especially true of those who find a practical living in rebellion participation, as no other feasible livelihood opportunity exists.

John Garang, head of the Sudan People’s Liberation Movement, stated, “under these circumstances the marginal cost of rebellion in the South became very small, zero, or negative; that is, in the South it pays to rebel.”

Resource-based economies with weak institutions are catalysts for political violence.  Excessive government interference encourages rent-seeking. Regulatory barriers-to-entry invite corruption in relation to the extractive industries sector and, when combined with a lack of transparency, serve to further enrich the ruling elite.

Where property rights are weak, state expropriation occurs frequently.  Therefore, a weak rule of law – combined with regulatory burden and a lack of accountability and transparency – all serves to further entrench kleptocratic regimes.

It seems that the sequester of resource wealth by corrupt regimes most likely encourages rebellion and violence, especially if violence would provide a livelihood opportunity for unemployed youth, as well as offering rebels the opportunity to capture resource wealth.

The Iraq Case

For example, oil and gas sales from ISIS-seized refineries present the largest source of funds for the militant group. ISIS also pays salaries to its fighters; considering that post-war Iraq’s youth unemployment rate stands at nearly 20%, a violent militant job is at least a paying job, and thus presents a low opportunity cost.

A country’s possession of natural resource wealth does not mean that a country is condemned to perpetual civil unrest and war; rent-seeking and corruption does.

Increasing economic freedom in resource-rich developing countries means more economic opportunities. Cronyism and its attached corruption must be eliminated in favor of strengthening property rights and the rule of law, and by reducing regulatory and trade burdens that ultimately serve the interests of the political elite while reducing prosperity for the majority of citizens.

The “resource curse” should be called what it is: bad political institutions.

Tyler Bonin

Tyler Bonin

Tyler is a teacher at Thales Academy, a classical school in North Carolina.

RELATED ARTICLE: The Suffering of Socialist Venezuela

Promising Advice on Car Injury Claims

When a person makes a car injury claim, two things come up to mind: settle or go to court?

Many people do not know that settling can be the more viable option. Settling is even a good choice even if the possibility of going to court has yet to surface.

Settling can be a good option, but what if the insurance company ignores you? Or the terms presented to you might be considered too small? How about when you strongly feel that you are a victim of injustice? Going to court might be the wisest option you can have.

In this article, we weigh in the advantages of both Settling and Going to court.


As mentioned above, settlement can be the most viable option there is. If you find that the company that you are suing presents you with fair and appropriate solutions, settling may not be such a bad idea.

Here are some advantages of settling:

You can get compensation much faster

You’ll be able to get a quicker settlement because the terms between you and the company you are suing, are usually settled off the court. Therefore you can avoid those long hearing schedules which could delay you much more in the long run.

Avoiding Expensive Attorney’s fees

Depending on your agreement with your attorney, you might have to incur expensive costs. These charges are sometimes too expensive to the point that the whole settlement and compensation you make out of this lawsuit can be just for the payment fees.

Make it a point to your lawyer to talk about his fees and always consider some lawyers who do pro bono services that may greatly be beneficial for you.

Cost Efficient

Hearing schedules are what you need to endure should you decide to go to court. When you do go to court, hearings are not given automatically, instead they are scheduled. The wait for your time in court may reach a few weeks, months and even worse, some cases even take years.

Avoiding an Unpredictable Decision From the Jury

Panel members significantly affect the outcome of your trial. If you don’t understand how a jury makes its decisions, then settle to avoid any unpredictability when it comes to your trial.

Even if the trial or hearing has started, you can reach the company you are suing to agree on settling. It is always safe to say to try and talk at any point in the case to come to an agreement.

The central question that we should ask ourselves is, how much risk is there in losing the trial? If you are confident and feel good about the outcome of the case, ask for guidance from a good lawyer and proceed to court.

Going to Court

Proceeding to a hearing should be the last thing you consider. If all conditions do point towards it, then you must be prepared with the work that comes with it.

Here are some advantages of going to court:

Receiving full compensation

If a settlement is out of the question or if you feel that the compensation is unfair, then going to court can help you in claiming what is rightly yours. A court decision can legally enforce your rights for you, making the company liable for paying for the damages wrongfully done to you.


Sometimes, companies can also refuse a re-negotiation. Compelling the defendant through the court’s powers can reverse that. If you do win in a court, gratification can sometimes be even a much greater thing than the compensation itself.

People at times feel that they have been wronged too much and be victims of injustice that they feel the whole process of going to court is the only way to alleviate their feelings. Compensation, as they say, can be the “icing on top.”


Settlement and going to court is a coin toss. Either you win the case, or you lose it. To avoid this situation, you have to carefully weigh your arguments and claims to make sure that no facts can disprove it. Knowing the advantages and the risks that come with it is hugely beneficial because it can make or break you when the time finally comes.

Index finds Rallying Home Purchase Market in 2016

Today, AEI’s International Center on Housing Risk (ICHR) and First American Financial Corporation release the AEI/First American National Housing Market Index (NHMI), the first index ever to analyze sales transaction volume for the entire home purchase market.

The national housing market continued its rally in the fourth quarter of 2016. On an annualized basis, 5,810,000 sales transactions were reported, which is up 350,000 transactions, or 6.4 percent, from 2015.

  • 2015 had already seen demand grow by 340,000 transactions or 7.6 percent from 2014.
  • The home purchase market also closed out 2016 with strong growth as transactions increased 9.1 percent in the fourth quarter compared to a year ago.
  • Cash sales continued to trend down accounting for only 29 percent of all transactions in 2016, down from 30 percent in 2015 and 36 percent in 2013.
  • Filling its void was government-backed lending, which accounted for 55 percent of all transactions in 2016, up from 53 percent in 2015 and 50 percent in 2013. 
  • The AEI/First American National Housing Market Index (NHMI) is the first index to report on the entire home purchase market.
  • Transaction numbers are also available on the state and metro area level for unprecedented geographical detail.

The NHMI combines ICHR’s data on the federal agency market (Fannie Mae, Freddie Mac, Federal Housing Association, Veterans Affairs, and Rural Housing Services) with data provided by First American via for the private side of the mortgage market and for cash and non-institutionalized lender sales. The combined data set nearly covers the volume of the entire market at the national, state, and metro levels. To account for the small amount of incomplete data, housing data are scaled to estimate total volume at the various reported levels.

In contrast to existing estimates of home sales, the AEI/First American NHMI is based on comprehensive loan- and transaction-level data and does not involve extrapolations from a survey or sample of the housing market. Other published data are based on surveys or samples, necessitating assumptions about the entire market. The NHMI is the only metric that (i) compiles data from virtually the entire housing market, (ii) provides views into the data from many key perspectives, and (iii) is published quarterly with minimal time lag.

The AEI/First American NHMI is released quarterly by AEI’s ICHR. It provides counts for home purchase transactions undertaken with institutional financing or other financing, as well as cash sales. In addition, dollar volumes, loan counts, average loan amounts, and market shares for primary owner and secondary owner/non-owner tenure types will be provided at the national, state, and metro area level for each of the five loan agencies (Fannie Mae, Freddie Mac, the FHA, the VA, and Rural Housing Services), as well as for the private (non-agency) loan sector in order to give an accurate and detailed picture of activity in the home purchase and the mortgage loan markets. Today’s release reports on transactions from the fourth quarter of 2016. The quarterly time series tracks housing data back to the fourth quarter of 2012 and is based on almost 23 million home purchase transactions. The number will grow with each additional quarter of data.

“The NHMI-Primary Owner Purchase Loan volume index rose to 141 in 2016: Q4, as compared to 124 in 2015:Q4 and 116 in 2014:Q4,” noted Edward Pinto, co-director of the American Enterprise Institute’s (AEI’s) International Center on Housing Risk. “Based on these and other data, I expect 2017 purchase originations to continue to grow robustly.”

“The total value of residential purchase transactions in the U.S. housing market approached $1 trillion in 2016, coming in at $965 trillion for the year. The share of cash sales continues to decrease, but remains a significant portion of the overall market at 29 percent,” said Mark Fleming, chief economist at First American. “Entering the busy spring home buying season, I expect prices to continue to rise and transaction volumes to continue to grow, spurred on by the strong sellers’ market and increasing Millennial, first-time homebuyer demand.”

The NHMI for the first quarter of 2017 will be released on June 26, 2017.

To arrange an interview with Ed Pinto, please contact AEI Media Services at or 202.862.4870.

To arrange an interview with First American Chief Economist Mark Fleming, please contact First American’s corporate communications team at 714-250-3298. Mark Fleming’s unique research and analysis of real estate, mortgage risk and housing trends is available at

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and investment advisory services. With revenues of $5.6 billion in 2016, the company offers its products and services directly and through its agents throughout the United States and abroad. In both 2016 and 2017, First American was recognized by Fortune® magazine as one of the 100 best companies to work for in America. More information about the company can be found at

About AEI

AEI’s International Center on Housing Risk provides research, commentary, and new tools for measuring housing and mortgage market trends. Mr. Pinto is the codirector of the ICHR, a resident fellow at AEI, and a former executive vice president and chief credit officer for Fannie Mae.

Real vs Fake Health Care Reform, and How to Tell the Difference by Jeffrey A. Tucker

You want to know why the “freedom caucus” has balked at passing the Trump-backed Ryancare health care proposal?

Because the package does not address the core problem of the existing system. They are leaning – correctly – on a brilliant insight from F.A. Hayek.

Let’s think this through.

What was the most fundamental problem with Obamacare? It attempted to set up an artificial market that lacked the most salient feature of markets: genuine competition. Real competition. I don’t mean teams struggling for control. I mean an institutional setting in which producers can innovate. They face free entry and exit. Their well-being depends on serving the consumer.Obamacare has flopped because it disabled what remained of the competitive system with defined benefits packages, mandates that everyone be covered, requirements that everyone must purchase, and geographic limits on service provision. All these together took health care out of the realm of markets and made it a form of central planning.

And so: Obamacare resulted in soaring premiums, soaring deductibles, shoddy access, and ever-increasing bureaucracy. It became untenable. Objecting to it doesn’t have to be a matter of ideology. The contraption just didn’t work.

The core insight of the “freedom caucus” comes from Hayek and his fascinating piece “The Meaning of Competition”:

It is only through competition that we can assume that these possible savings of cost will be achieved. Even if in each instance prices were only just low enough to keep out producers which do not enjoy these or other equivalent advantages, so that each commodity were produced as cheaply as possible, though many may be sold at prices considerably above costs, this would probably be a result which could not be achieved by any other method than that of letting competition operate …

Yet the current tendency in discussion is to be intolerant about the imperfections and to be silent about the prevention of competition. We can probably still learn more about the real significance of competition by studying the results which regularly occur where competition is deliberately suppressed than by concentrating on the shortcomings of actual competition compared with an ideal which is irrelevant for the given facts.

I say advisedly “where competition is deliberately suppressed” and not merely “where it is absent,” because its main effects are usually operating, even if more slowly, so long as it is not outright suppressed with the assistance or the tolerance of the state.

The evils which experience has shown to be the regular consequence of a suppression of competition are on a different plane from those which the imperfections of competition may cause. Much more serious than the fact that prices may not correspond to marginal cost is the fact that, with an entrenched monopoly, costs are likely to be much higher than is necessary …

Competition is essentially a process of the formation of opinion: by spreading information, it creates that unity and coherence of the economic system which we presuppose when we think of it as one market. It creates the views people have about what is best and cheapest, and it is because of it that people know at least as much about possibilities and opportunities as they in fact do. It is thus a process which involves a continuous change in the data and whose significance must therefore be completely missed by any theory which treats these data as constant.

Let me paraphrase and apply: no, there will not be a perfect world. Total freedom is not a political option right now. So what’s the priority for any reform? The most crucial institutions in any society are the signaling systems of prices that reflect existing knowledge and possibilities.

When those are malfunctioning, nothing else works. Costs go up, quality goes down, innovation stops, and the sector starts to atrophy.

Competition Restoration Means Health Care Restoration

The first priority is that competition must be restored through some measure of deregulation. The mandates must go. The pre-set benefits packages must die. Insurers must gain control over their business affairs and customers have to be able to shop and choose.

We must regain flexibility to inspire innovation and achieve profitability. This must happen or else premiums will keep going up. This is a requirement. Obamacare failed because it disabled the market. Any reform must restore that market. This is more important than any other feature of reform.Trumpcare or Ryancare or whatever you want to call it does not do that. It replaces a mandate to buy with a tax incentive to buy. Otherwise it leaves the problem of the absence of genuine competition in place. True, the alternative doesn’t do anything about the transfer of payments, but, if you follow Hayek, you know that these are less important to eliminate than are the barriers to competition.

The restoration of competition will discover for us things we do not know about service provision: treatments, plans, new institutional arrangements, new forms of insurance, new methods for serving the public. Competition will grow the market and make profitability the test of success or failure.

If that does not happen, premiums will keep increasing, quality will go down, access will continue to shrink, and public anger will grow as a result.

Now is the time. Again, it is not about ideology. It is about a system of health care insurance that actually works to serve the common good.

Jeffrey A. Tucker

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

RELATED ARTICLE: Is Trump Sabotaging Obamacare? – POLITICO Magazine

RELATED VIDEO: Senator Rand Paul Doesn’t Want the GOP to Fail at Obamacare Replacement Plan.

EDITORS NOTE: Learn real skills from successful entrepreneurs at FEEcon: June 15-17 (Register by May 15).

In California, Florida and Illinois 50% of all babies are born on Medicaid

Terence P. Jeffrey in his March 24th, 2017 column In 24 States, 50% or More of Babies Born on Medicaid; New Mexico Leads Nation With 72% writes:

In 24 of the nation’s 50 states at least half of the babies born during the latest year on record had their births paid for by Medicaid, according to the Kaiser Family Foundation.

New Mexico led all states with 72 percent of the babies born there in 2015 having their births covered by Medicaid.

[ … ]

In California, Florida and Illinois, for example, 50 percent of all babies were born on Medicaid in the latest year on record.

Read more…

According to the Kaiser Family Foundation (KFF) report Implementing Coverage and Payment Initiatives: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2016 and 2017:

Medicaid has become one of the nation’s most important health care programs, now providing health insurance coverage to more than one in five Americans, and accounting for over one-sixth of all U.S. health care expenditures. [Emphasis added]

The KFF report concludes that, “Medicaid programs now play a significant leadership role in the health care systems in every state.”

Kaiser Family Foundation published a map showing the percentage of babies by state who are born on Medicaid:

babies born medicaid by state

You may view a chart with the details of each states births paid for by Medicaid by clicking here.

american_health_care_actMedicaid reform is much needed and will be part of the next version of the House of Representatives American Health Care Act (AHCA). The AHCA website lists 8 Need-To-Know Facts About the AHCA, one of which addresses Medicaid:

6. Modernizes and strengthens Medicaid by transitioning to a “per capita allotment” so states can better serve the patients most in need.

KFF gave this analysis of “per capita allotment” contained in a previous House Republican Healthcare Plan:

The House Republican Plan (“A Better Way”) released on June 22, 2016, includes a proposal to convert federal Medicaid financing from an open-ended entitlement to a per capita allotment or a block grant (based on a state choice).

This proposal is part of a larger package designed to replace the Affordable Care Act (ACA) and reduce federal spending for health care.  Often tied to deficit reduction, proposals to convert Medicaid’s financing structure to a per capita cap or block grant have been proposed before.

Such changes represent a fundamental change in the financing structure of the program with major implications for beneficiaries, providers, states and localities.

Read more…

There was a time in America when babies were paid for by their families. Perhaps it is time for government to get out of the baby funding business and let families take control?

5 Charts That Will Shift Your Perspective on Poverty by Chelsea Follett

Angus Deaton, the Nobel-prize winning economist (who also sits on the advisory board of, recently reiterated his belief that on the whole the world is getting better–if not, as he accepted, everywhere or for everyone at once. Perhaps that comes as no surprise, but the idea that the world is getting better in regards to poverty is actually a deeply unpopular view.

Ask most people about global poverty, and chances are that they’ll say it is unchanged or getting worse. A survey released late last year found that 92 percent of Americans believe the share of the world population in extreme poverty has either increased or stayed the same over the last two decades.

Americans aren’t alone in that belief. Across all surveyed countries, an only slightly smaller majority–87 percent–believe that extreme poverty has risen or remained an intractable problem.

There are a number of cultural and psychological explanations for the persistence of such pessimism. Bad news makes for good headlines and tends to dominate media coverage. Psychologically, people tend to idealize the past and recall dramatic and unusual events more easily than steady long-term trends. They may also use pessimism as a means of virtue signaling.

Indeed, of those rare people who realize that extreme poverty has declined, almost all underestimate the extent of that decline. In fact, global poverty has halved over the past 20 years­–but only one person in 100 gets it right.

Unsurprisingly, people in areas that have seen the most dramatic reductions in poverty are the most likely to be more aware of what’s really going on. But even in China, where hundreds of millions of people have risen out of destitution over the last four decades, half of the population remains ignorant of the broader collapse in world poverty that has occurred within their lifetimes.

To help bridge the gap between public perceptions and reality, here are five charts, based on data we’ve collected at, that illustrate the extraordinary progress humanity has made.

Throughout most of human history, extreme poverty has been the norm. This famous hockey-stick chart, arguably the most important graph in the world, illustrates what happened when the Enlightenment and Industrial Revolution caused income to skyrocket­–forever changing the way we live, and perhaps even the way we think.

Humanity, as this chart shows, produced more economic output over the last two centuries than in all of the previous centuries combined. And this explosion of wealth-creation led to a massive decrease in the rate of poverty. In 1820, more than 90 percent of the world population lived on less than $2 a day and more than 80 percent lived on less than $1 a day (adjusted for inflation and differences in purchasing power). By 2015, less than 10 percent of people lived on less than $1.90 a day, the World Bank’s current official definition of extreme poverty.

Not only has the percentage of people living in poverty declined, but the number of people in poverty has fallen as well – despite massive population growth. There are also more people alive who are not in penury than there have ever been. From 1820 to 2015, the number of people in extreme poverty fell from over a billion to 700 million, while the number of people better off than that rose from a mere 60 million to 6.6 billion. (Extreme poverty is again defined here as living on $1.90 a day, adjusted for inflation and differences in purchasing power.)

Globally, poverty is about a quarter of what it was in 1990. And the graph below from Johan Norberg’s excellent book, Progress: 10 Reasons to Look Forward to the Future, illustrates how the decline of extreme poverty has raised living standards and brought about other tangible improvements. As poverty has lessened, so have child mortality, illiteracy, and even pollution in wealthy countries – all are now less than half of what they were in 1990. Hunger has also become much rarer. You can learn more about how increased prosperity has led to progress in other areas by watching this video from a forum inspired by Norberg’s book.

If progress continues on its current trajectory, the Brookings Institution estimated in 2013 that extreme poverty (this time defined as living on $1.25 a day, again adjusted for inflation and differences in purchasing power) will all but vanish by 2030, affecting only 5 percent of the global population. This is what they considered to be the “baseline” or most likely scenario. In the best-case scenario, they predicted that by 2030 poverty will decrease to a truly negligible level, affecting only 1.4 percent of the planet’s population.

The facts are unambiguous: despite public perceptions to the contrary, extreme poverty has declined significantly, to the point where its end may actually be in sight. So next time you hear someone bemoaning a supposed rise in world poverty, encourage them to have a look at the evidence for themselves.

Reprinted from Human Progress.

Chelsea Follett

Chelsea Follett

Chelsea Follet works at the Cato Institute as a Researcher and Managing Editor of