Happy Capital Day? Why not? by Lawrence W. Reed

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Any good economist will tell you that as complementary factors of production, labor and capital are not only indispensable but hugely dependent upon each other as well.

Capital without labor means machines with no operators, or financial resources without the manpower to invest in. Labor without capital looks like Haiti or North Korea: plenty of people working but doing it with sticks instead of bulldozers, or starting a small enterprise with pocket change instead of a bank loan.

Capital can refer to either the tools of production or the funds that finance them. There may be no place in the world where there’s a shortage of labor but every inch of the planet is short of capital. There is no worker who couldn’t become more productive and better himself and society in the process if he had a more powerful labor-saving machine or a little more venture funding behind him. It ought to be abundantly clear that the vast improvement in standards of living over the past century is not explained by physical labor (we actually do less of that), but rather to the application of capital.

Harmony of Interest

This is not class warfare. I’m not “taking sides” between labor and capital. I don’t see them as natural antagonists in spite of some people’s attempts to make them so. Don’t think of capital as something possessed and deployed only by bankers, the college-educated, the rich, or the elite. We workers of all income levels are “capital-ists” too—every time we save and invest, buy a share of stock, fix a machine, or start a business.

And yet, we have a “Labor Day” in America but not a “Capital Day.”

Perhaps subconsciously, Americans do understand to some extent that those who invest and deploy capital are important. After all, most people would surely have an easier time naming the “top ten capitalists” in our history than the “top ten workers.” We take pride in the kids in our neighborhoods when they put up a sidewalk lemonade stand. President Obama continues to be roundly excoriated for his demeaning remark, “You didn’t build that; somebody else made that happen.”

Bad Eggs

That’s not to say there aren’t bad eggs in the capitalist basket. Some use political connections to get special advantages from government. Others cut corners, cheat some customers or pollute a stream. But those are the exception, not the rule, in a society that values character. Workers are not all saints either—who among us doesn’t know of one who stole from his employer, called in sick when he wasn’t, or abused the disability or unemployment compensation rules? Those exceptions shouldn’t diminish the importance of work or the nobility of most workers.

Like most Americans, I’ve traditionally celebrated labor on Labor Day weekend—not organized labor or compulsory labor unions, mind you, but the noble act of physical labor to produce the things we want and need. Nothing at all wrong about that!

But this year on Labor Day weekend, I’ll also be thinking about the remarkable achievements of inventors of labor-saving devices, the risk-taking venture capitalists who put their own money (not your tax money) on the line and the fact that nobody in America has to dig a ditch with a spoon or cut his lawn with a knife. Indeed, what could possibly be wrong about having a “Capital Day” in odd numbered years and a “Labor Day” in the even-numbered ones?

Labor Day and Capital Day. I know of no good reason why we should have just one and not the other.

EDITORS NOTE: This article first ran on September 3, 2012.

larry reed new thumbABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

One Million Strong, Rocking DC!

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“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.” – Vince Lombardi

Leadership guru Ken Blanchard said, “The key to successful leadership is influence, not authority.” That’s an interesting concept when thinking about how best to advance the FairTax®.

Certainly, Congress has the upper hand on We the People when it comes to sheer authority. And for what authority they may lack, Members have perfected the art of using the IRS as a tidy little enforcement mechanism.

So that brings us back to influence. How can We the People really influence the Members of Congress who stand between the income tax and passage of the FairTax® Plan?

To answer that question, one must first ask, who actually has influence on Members of Congress?

Late last year Greenberg Quinlan Rosner Research conducted a poll and asked that question. Sadly, constituents ranked themselves at the bottom of the barrel (11 percent) feeling they had little to no influence on the very people they elected to represent them. Who came in first? Why K-street lobbyists of course, by a whopping 65 percent. And who came in second on the influence peddling quotient? Campaign contributors at 52 percent.

This makes sense because the only thing that Members of Congress fear is that the electorate may throw them out. Lobbyists and campaign contributors provide the money to help the Members overwhelm their opponents and be reelected.

However, since often only 40,000 people vote in Congressional primary elections, money is not enough. They love the money but they fear associations with paid members residing in their district. The most effective groups and lobbyists are the ones that have the advantage of pointing to paid members who are passionate about an issue and who will favor the candidate that supports their issue.

That’s why Americans For Fair Taxation® has recently launched a new paid membership drive with a goal of signing up one million paid FairTax members.

Imagine the voice that one million paid FairTax members will have in Congress! You are already putting the pressure on Members; with one million paid FairTaxers you will really turn up the heat. Now that’s exciting!

To make it as easy as possible for one million patriots to join the FairTax movement, we have created multiple membership plans to fit everyone’s budget – from a $5 student to a $500 Patron – and everything in between. And if you really want to magnify your impact, consider sponsoring a membership for friends and family, but first share the good news of the FairTax with them to ensure they want to become a member.

To become a FairTax member, simply go to FairTax.org and click on the gold “Become a Member” button in the upper left corner. Complete the form and take pride in helping the FairTax campaign do what no other tax reform movement has done in the history of tax reform advocacy.

Alan Watts said, “The only way to make sense out of change is to plunge into it, move with it and join the dance.” Paid membership is a major change for the FairTax campaign. It is a change that will reap incredible benefits as soon as we reach the critical mass needed to get all Members’ attention. I invite you to take the plunge and join the dance.

Together we will PASS THE FAIRTAX!

EDITORS NOTE: The featured photo is of protesters rallying against government tax and spending policies at the U.S. Capitol on September 12, 2009, in Washington, D.C. by Rena Schild/Shutterstock.

CLICHES OF PROGRESSIVISM #20 – Government Can Be a Compassionate Alternative to the Harshness of the Marketplace

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In every election campaign, we hear the word “compassion” at least a thousand times. One political party supposedly has it, the other one doesn’t. Big government programs are evidence of compassion; cutting back government is a sign of cold-hearted meanness. By their misuse of the term for partisan advantage, partisans and ideologues have thoroughly muddied up the real meaning of the word.

The fact is that some of what is labeled “compassionate” is just that, and it does a world of good; but a whole lot of what is labeled “compassionate” is nothing of the sort, and it does a world of harm. The former tends to be very personal in nature, while the latter puts an involuntary burden on someone else.

As Marvin Olasky pointed out in his 1994 book, The Tragedy of American Compassion, the original definition of compassion as noted in The Oxford English Dictionary is “suffering together with another, participation in suffering.” The emphasis, as the word itself shows—“com,” which means with, and “passion,” from the Latin term “pati,” meaning to suffer—is on personal involvement with the needy, suffering with them, not just giving to them. Noah Webster, in the 1834 edition of his American Dictionary of the English Language, similarly defined compassion as “a suffering with another.”

But the way most people use the term today is a corruption of the original. It has come to mean little more than, as Olasky put it, “the feeling, or emotion, when a person is moved by the suffering or distress of another, and by the desire to relieve it.” There is a world of difference between those two definitions: One demands personal action, the other simply a “feeling” that usually is accompanied by a call for someone else—namely, government—to deal with the problem. One describes a Red Cross volunteer, the other describes the typical Progressive demagogue who gives away little or nothing of his own resources but lots of yours.

The plain fact is that government compassion is not the same as personal and private compassion. When we expect the government to substitute for what we ourselves ought to do, we expect the impossible and we end up with the intolerable. We don’t really solve problems, we just manage them expensively into perpetuity and create a bunch of new ones along the way.

From 1965, the beginning of the so-called War on Poverty, to 1994, total welfare spending in the United States was $5.4 trillion in constant 1993 dollars. In 1965, total government welfare spending was just over 1 percent of gross domestic product, but by 1993 it had risen to 5.1 percent of GDP annually—higher than the record set during the Great Depression. The poverty rate in 1994 was almost exactly where it was in 1965 and now, 20 years later, it’s even higher. It was apparent when “welfare reform” was enacted in 1996 that millions on welfare were living lives of demoralizing dependency; families were rewarded for breaking up; and the number of children born out of wedlock was in the stratosphere—terrible facts brought about, in large part, by “compassionate” government programs.

A person’s willingness to spend government funds on aid programs is not evidence that the person is himself compassionate. Professor William B. Irvine of Wright State University in Dayton, Ohio, once explained, “It would be absurd to take a person’s willingness to increase defense spending as evidence that the person is himself brave, or to take a person’s willingness to spend government money on athletic programs as evidence that the person is himself physically fit.” In the same way as it is possible for a “couch potato” to favor government funding of athletic teams, it is possible for a person who lacks compassion to favor various government aid programs; and conversely, it is possible for a compassionate person to oppose these programs.

It is a mistake to use a person’s political beliefs as the litmus test of his compassion. Professor Irvine said that if you want to determine how compassionate an individual is, you are wasting your time if you ask for whom he voted; instead, you should ask what charitable contributions he has made and whether he has done any volunteer work lately. You might also inquire into how he responds to the needs of his relatives, friends, and neighbors.

Many of the political world’s most boisterous welfare statists are also among the most duplicitous and selfish (in the bad sense of the term) hypocrites. While small-government conservatives and libertarians generally give generously from their own pockets, charitable organizations are often lucky to get a little more than token donations from the “progressives” of the world. For a mountain of evidence in that regard, see the 2006 book, Who Really Cares? by Arthur Brooks, then at Syracuse University and now president of the American Enterprise Institute.

It’s worth noting that not even progressives donate to supposedly “compassionate” government agencies a penny more than the law requires them to. There’s nothing illegal about writing out a check to the “Department of Health and Human Services,” but progressives, when they seek to personally help others, tend to write their checks out to private agencies.

True compassion is a bulwark of strong families and communities, of liberty and self-reliance, while the false compassion of the second usage is fraught with great danger and dubious results. True compassion is people helping people out of a genuine sense of caring and brotherhood. It is not asking your legislator or congressman to do it for you. True compassion comes from your heart, not from the state or federal treasury. True compassion is a deeply personal thing, not a check from a distant bureaucracy.

In a television interview in Nassau, Bahamas, in November 2012, I was asked by host Wendall Jones, “Mr. Reed, what about the Good Samaritan in the New Testament? Doesn’t that story show that government should help people?” My reply: “Wendall, what made the Good Samaritan good was the fact that he personally helped the stricken man along the road. If he had simply told the helpless chap to ring up his congressman, no one to this day would have the gall to call him anything but a good-for-nothing.”

“But what about Christianity itself?” Jones then asked me. “Isn’t it in favor of redistribution as a compassionate way to help the poor?” Fortunately, I know a few things about the Bible and Christianity. My reply: “Wendall, the Eighth Commandment says ‘Thou shalt not steal.’ It doesn’t say, ‘Thou shalt not steal unless the other guy has more than you do or unless you’re convinced that you can spend it better or unless you can find a politician to take it on your behalf.’ And even more to the point, a new book on the subject, For the Least of These: A Biblical Answer to Poverty (link provided below) answers this question in both a detailed and scholarly fashion.

Progressives are often so convinced of their moral superiority that they tend to be very intolerant of a good, opposing argument. Mr. Jones edited out the above exchange before airing the show, but you can see the rest of it here.

The marketplace is often dismissed as a cold, impersonal, and selfish place where compassion takes a back seat to self-interest. But that view ignores some important facts: 1) The marketplace is what produces the wealth that compassion allows you to share or give away; 2) Historically, the freest of societies are the most compassionate in the truest sense of the term; 3) Nothing about being a government employee spending other people’s money makes you more compassionate or effective than the rest of society; 4) Government “compassion” usually gets diverted toward vote-buying and programs that perpetuate the very problems it was supposed to remedy. The news brings daily reminders that there’s no shortage of “harshness” in government—as well as greed, waste, fraud, and inefficiency.

The next time you hear the word “compassion,” probe the person invoking it to find out if he really knows what he’s talking about—or at least to determine if he is compassionate with his own resources.

Lawrence W. Reed
President
Foundation for Economic Education

Summary

  • “Compassion” isn’t simply giving something away, especially if what you’re giving wasn’t yours in the first place.
  • True compassion means getting personally involved.
  • Instinctively, when we want to help others with our own time and resources, we overwhelmingly tend to do so through donations of time and money to private agencies, not to public ones.
  • The marketplace, where self-interest is a powerful motivator for the creation of wealth, is therefore the primary source for whatever wealth anybody has to give away.

For further information, see:

“The Politics of Compassion” by William B. Irvine

“Presidents and Precedents” by Lawrence W. Reed

For the Least of These: A Biblical Answer to Poverty, edited by Anne Bradley and Art Lindsley

“Book Review: The Tragedy of American Compassion by Marvin Olasky” as reviewed by Daniel Bazikian

larry reed new thumbABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

EDITORS NOTE: Earlier versions of this essay have appeared in FEE publications under the title, “What Is Real Compassion?” The featured image is courtesy of FEE and Shutterstock.

Two Blockbuster IRS Annoucements

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Yesterday, in a blockbuster announcement, Thomas Kane, Deputy Assistant Chief Counsel for the IRS, wrote in a sworn lawsuit declaration that former IRS senior manager Lois Lerner’s now infamous BlackBerry was “removed or wiped clean of any sensitive or proprietary information and removed as scrap for disposal in June 2012.”

The magnitude of lies, deceit and corruption is incredible isn’t it? But that’s how it is when an out-of-control bureaucracy does the political bidding of Congress.

Thankfully, the FairTax® will eliminate the IRS and replace the income tax code with a simple and fair national sales tax. For the first time in 200 years, the American people will have independence from oppressive income taxation.

Much like when Gandhi sought independence for India and Pakistan and when asked about his non-violent protest in support of that goal he said, “First they ignore you, then they laugh at you, then they fight you, then you win.”

For years, Washington’s elites have ignored, laughed and even fought the FairTax Plan. But as the IRS targeting investigation has unfolded, the laughing has all but stopped and the FairTax is being talked about more and more as a viable alternative to the current tax code.

More importantly, “experts” are openly discussing it as the only tax reform plan that can eliminate a completely corrupt and out-of-control IRS. 

Meanwhile, during this election year, most members of Congress continue to operate with their usual level of arrogance; acting like they own their elected office. Yet, make no mistake; they secretly fear being ousted in any primary election when their electorate finally gets smart. Just ask former Majority Leader Eric Cantor.

The ouster numbers, however, are not currently in favor of We the People.

As the Washington Post stated in June, “Overall, voter turnout among the 25 states that have held primaries is down 18 percent from the 2010 election, according a study by the Center for the Study of the American Electorate. There were almost 123 million age-eligible voters in these primary states, but only about 18 million of them voted.” With an average of 15% of the eligible voters turning out in primary elections, an average of 40,000 voters decided the primary election.

A new initiative in the FairTax campaign aims to change that dynamic. 

We know that Members are most influenced by groups that have large numbers of paying members in their districts. Imagine the influence on just one Congressional district if AFFT had 3,000 paying members who could influence 1, 5, or 10 voters. Now we have their attention!

As a 501(c)(4), AFFT cannot directly participate in political campaigns, but we can let our supporters know if a candidate supports the FairTax Plan. And, those supporters can take that knowledge to the election booth.

Today, AFFT is announcing a new AFFT membership drive designed to increase our sphere of influence in Washington and accelerate passage of the FairTax. 

Each of you is being asked to become a paying member of AFFT. Annual membership plans begin at $5.00 and best of all, your membership payment will be divided equally between AFFT and your state FairTax organization!

Your membership will help fund greater efforts at both the local and national levels. And, in exchange for your paid membership, you will receive a credit in the FairTax.org store equal to 10% of your paid membership.

And here’s how you can multiply your membership impact and AFFT’s ability to make Congress listen. Think of 5 or 10 family members, employees or friends and sponsor them for AFFT membership! Please make sure you let these individuals know in advance that you would like to sponsor their membership so they do not hit “unsubscribe” or “spam” when we begin providing them with information on the FairTax Plan.

You will get store credit, your state will still receive their share of your membership and you will have magnified your impact!

Napoleon Hill said, “You must get involved to have an impact.”

Don’t delay – go to FairTax.org and click on “Become a Member” today.

RELATED ARTICLE: Campaigning Against Tax Inequality

America, Our Debt-Ridden Nation

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Let’s look at just some of the latest news about the U.S. economy:

  1. According to the Treasury Department’s Bureau of Fiscal Services, the federal government paid $2,007,358,200,000—over $2 trillion—in benefits and entitlements in the 2013 fiscal year, October 1, 2012 to September 30, 2013. Most of the benefits, 69.7% came from non-means tested government programs that provide them to recipients who qualify regardless of income. That would include Medicare, Social Security, unemployment compensation, veteran’s compensation, and railroad retirement, to name a few.
  2. The total federal government spending in 2013 totaled $3,454,253,000,000—over $3.4 trillion—encompassing defense, highway and transportation costs, public education, immigration services, and government worker salaries, to name a few.
  3. An astonishing amount of that spending constitutes wasted taxpayer money. In July the Government Accountability Office (CAO) testified before Congress that federal agencies made more than $100 billion in improper payments in 2013. That is an amount comparable to the combined total budgets of the Coast Guard, U.S. Immigration and Customs Enforcement agency, Border Patrol, Secret Service, and the Federal Emergency Agency, et cetera. Improper payments result when people collect money from government programs for which they are ineligible.
  4. By August, the total U.S. federal debt had increased to more than $7 trillion during the five and a half years since Barack Obama has been President. That is more than the debt increased under all U.S. Presidents from George Washington through Bill Clinton—combined! More debt than was accumulated in the first 227 years from 1776 through 2003.
  5. During the time President Obama has been in office the number of unemployed reached 37.2%, a 36-year high for those 16 or older who do not have a job and are not actively seeking one. From December 2013 through May of this year, the labor participation rate had been at 62.8%. The last time the labor participation rate was that low was February 1978 when Jimmy Carter was President.
  6. As the nation sank deeper into debt by the end of 2012 there were 109,631,000 Americans living in households that were receiving one or more federally funded “means-tested programs”, more generally referred to as welfare. Combined with those receiving non-means-tested benefits and it added up to 49.5% of the population.

Money BombIt is always tempting to blame everything on the President and, despite the usual rebound from a recession that has occurred in the past, it has not occurred during his first term, nor into his second at this point. In fact, the latest data reveals that the U.S. economy shrank at a 2.9% annual rate during the first quarter of 2014. Its long-run average rate of growth has been 3.3%, but the highest since Obama took office was 2.8%.

According to the World Bank, in 2013 the U.S. Gross Domestic Product, the value of its goods and services, was $16,800,000,000,000. The federal, state and governments took their share via taxation on income and/or property. The rest was saved or spent by those either holding a job or receiving government benefits; very nearly half of the population old enough to be employed if there were jobs for them.

The problem that affects all of us is the imbalance of the U.S. budget where more money is going out than coming in. The difference is deemed the “deficit.” In order to pay bills, Congress has to agree to raise the limit on how much the nation can borrow.

Nick Dranias, the constitutional policy director for the Goldwater Institute, has come up with a proposal, “The Compact for a Balanced Budget”, and it was been published by The Heartland Institute, a free market think tank, in July.

As Dranias points out, “The U.S. gross federal debt is approaching $18 trillion. That figure is more than twice what was owed ($8.6 trillion) in 2006, when Barack Obama was a junior U.S. Senator from Illinois and opposed lifting the federal debt limit.” It represents more than $150,000 per taxpayer.

“What if states could advance and ratify a powerful federal balanced budget amendment in only twelve months, asks Dranias. His proposal is “a new approach to state-originated amendments under Article V of the U.S. Constitution.

Two states, Georgia and Alaska, are expected to establish a Balanced Budget Commission, an interstate agency dedicated to organizing a convention—before 2014 ends—to propose an amendment to achieve a balanced budget. The amendment would put “an initially fixed limit on the amount of federal debt.” It would ensure Washington cannot spend more than tax revenue brought in at any point in time, with the sole exception of borrowing under the fixed debt limit. It would force Washington to reduce spending long before borrowing reaches its debt limit, preventing any default on obligations; something threatening many other nations as well.

Suffice to say, the proposed amendment involves some complex elements and, if the Compact does not receive sufficient support from many more states than just the two that have signed on, it won’t see the light of day.

What the rest of us understand, however, is that federal spending is out of control at the same time as the amount of money it takes in is more than what it “redistributes.” Add in a sluggish economy, not growing at its usual rate, and you have a recipe for a lot of trouble ahead.

Republicans are usually credited with being more financially prudent. If true, we need to elect a Congress controlled by the GOP in November and a Republican President in 2016. If we don’t, all bets are off.

© Alan Caruba, 2014

Will Republicans pick up a U.S. Senate Seat in Delaware? Kevin Wade thinks so!

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Kevin Wade

Kevin Wade, Republican primary candidate for the U.S. Senate in Delaware.

With the primary races over and growing attention at the local, state and national levels will be on Tuesday, November 4, 2014. The real battle nationally is in the U.S. Senate. Millions will be poured into races to retain or obtain control of that body.

However, there is one key Republican U.S. Senate primary remaining – in Delaware.

On September 9th, 2014 the Republican primary for the U.S. Senate will be held in “The First State.” This race will take on greater interest as the Delaware primary approaches. Kevin Wade, a self-made business man, believes he can take and put the Delaware U.S. Senate seat solidly in the “R” column.

Historically the Delaware U.S. Senate seat is won with approximately 150,000 total votes. The race in November will likely hinge on about 8,000 voters changing their voting pattern on the General Election Day. It is projected that the Republican turnout will be 10% higher and 10% lower for the Democrats. That leaves 8,000 voters to be convinced to swing  this U.S. Senate Republican on November 4th.

This is the seat formerly held by now Vice President Joe Biden. That alone must have Delaware Republicans energized.

According to Wade, “It is all in reach. I don’t understand the fascination with ‘big state’ races at the national level. My vote in the U.S. Senate would count as much as California’s U.S. Senator. The yield on a donor dollar and volunteer hour is so much higher in this small voting universe in Delaware.”

Kevin Wade on the Two Americas:

Recently Wade was at the Gaza Frontier with Israeli Defense Forces (IDF) soldiers. Wade notes, “No civilian was closer. I am a trusted friend and have trusted friends there. Because of this trust, senior IDF officers closed their eyes to my presence in the forward area. The soldiers I met were returning from house-to-house fighting inside Gaza. Others were going across the fence line to enter combat. It was and remains a tough fight. To be clear I was not in combat; just nearby. One explosion was so close I felt the blast wave and my ears rang.”

“The soldiers asked me to break bread with them at their late night mess. Another night I was invited to join their prayer circle for the traditional Soldiers Prayer before they entered combat. I went to Israel, when under attack by Hamas rockets, to form a personal impression. On my last night in Israel I was invited to be a guest on I24 TV, Israel’s “CNN” for a live worldwide broadcast about the conditions there. Thirty minutes later I was face down in a roadside ditch due to another rocket attack. I saw the two rockets rise up with a fiery tail from a field to my right,” recalls Wade.

Watch this short video of Wade’s visit to Israel:

To learn more about Kevin Wade visit WadeforUSSenate.com.

TWO REPORTS: Teachers make up only 50% of all Education Jobs

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Parents, concerned citizens and taxpayers have long been concerned about the growing number of non-teaching jobs in public schools. Taxpayers want their property tax dollars to go primarily to the classroom. Two recent studies show that, overtime, education funding is increasingly going to non-teaching jobs.

Visual Editor at The Daily Signal and digital media associate at The Heritage Foundation, Kelsey Harris reports, “Even though the Obama Administration proposes spending $25 billion specifically to ‘provide support for hundreds of thousands of education jobs’ in order to ‘keep teachers in the classroom,’ research by both Heritage and The Fordham Institute reveal alarming numbers: only half of education jobs belong to teachers.”

The Fordham Institutes Matt Richmond writes, “The number of non-teaching staff in the United States (those employed by school systems but not serving as classroom teachers) has grown by 130 percent since 1970. Non-teachers—more than three million strong—now comprise half of the public school workforce. Their salaries and benefits absorb one-quarter of current education expenditures. ”

To show how teachers are no longer the majority The Fordham Institute and Heritage provide the following four charts and map (NOTE: For a larger view click on the chart/map):

Chart 1 & 2: Only half of education jobs are teachers:

Hidden-Half-Report chart 1

chart2-1 (1)

Chart 3: How education staffing has outpaced student enrollment:

chart1600

Chart 4: The farther a school is from a city, the more non-teaching staff it has:

Hidden half report chart 2

Map showing the number of teachers aides per 1,000 students by state:

Final-National-Map-Web

 

EDITORS NOTE: Click on the chart/map for a larger view.

Why is the ‘Conservative’ BizPac Review endorsing Democrat Karen Brill?

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Voters_Guide-2014-web-optimized-231x300The Palm Beach County based BizPac Review has sent out its August 26th primary endorsements. Jack Furnari sent out “Jacks 2014 Conservative Primary Voters Guide“. Furnari describes himself as “a conservative writer and political strategist in Boca Raton.” On Jack’s list is Karen Brill running for re-election for the Palm Beach School Board District 3 seat.

Many wonder why a conservative publication endorsed Brill, a liberal Democrat, over her conservative opponent John Hartman. Brill is pro-Common Core and was recently installed by the Florida School Board Association as President of the Greater Florida Consortium of School Boards.

The Greater Florida Consortium of School Boards’ 2014 Legislative Program has a “Priority Goal” to:

Support Common Core State Standards and Accountability, and develop a workable timeline for the implementation of accountability, but not before July 1, 2017, that includes student, teacher, principal, school and school district assessment, professional development, and evaluation.

Karen_Brill

Karen Brill, Democrat Palm Beach School Board, District 3.

Brill will be responsible to implement the Consortium’s legislative program, which includes:

  • Repeal requirements for districts to adopt EOCs in every subject not covered by the state assessment program.
  • Allow alternative ways for Post-Secondary Readiness Test compliance, such as Advanced Placement, International Baccalaureate, AICE, or Dual Enrollment programs.
  • Oppose any further expansion of the Florida Tax Credit and John McKay Scholarship Programs.
  • Provide state funding for any increased costs to the employer’s contribution to the Florida Retirement System.
  • Identify alternative revenue sources, including efforts to enforce the states existing sales tax on all internet sales made in Florida, and study a phase out of exemptions on non-essential goods.
  • Extend the voter-approved operation millage authority from four (4) years up to ten (10) years.
  • Provide state wide assessments in multiple languages for the first two years of testing.

Does this sound like a conservative legislative program? Is Brill, who will be pushing this program, a conservative? Many think not.

Brill’s campaign website states, “Prior to joining the School Board, I was actively involved in education locally, statewide and on the national level – most notably as an advocate for students with disabilities.” Yet, as President of the Consortium Brill will be working against further expansion of John McKay Scholarship Programs that help students with disabilities. Is this an oxymoron?

We will let you decide if Jack’s picks are conservative or not. Some may want to re-consider the Jack and BizPac Review 2014 Voter Guide?

The Best Debt in the World by Emma Elliot Freire

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Hard to believe, but Britain’s student loan problem is worse than the Yanks’.

In late 2010, tens of thousands of British students took to the streets of London. They protested government plans to cut direct funding of higher education and raise the cap on tuition from £3,290 ($5,500) to £9,000 ($15,000). Some of them occupied government buildings and clashed violently with police. Hundreds were arrested.

Maybe they shouldn’t have gotten so worked up. It’s now becoming clear that most of them won’t repay their loans in full. Some of them will even be getting their education for free.

The UK government’s student loan scheme is more generous than its American counterpart. Any British student who is accepted to a university is automatically entitled to a government loan for the entirety of their tuition. Most universities are charging £9,000 per year. British students can also get loans for their living costs, which range from £4,418 to £7,751 per year. The average student will graduate £44,000 ($74,000) in debt.

The core difference between the British and American systems lies in the terms of repayment. American students typically have to start repaying 6 months after they graduate. Opportunities for loan forgiveness are extremely limited, and loans cannot be discharged via bankruptcy. By contrast, British students don’t have to start repaying until they are earning £21,000 ($36,000) per year. They must then pay 9 percent of their gross income as long as they stay above the threshold. Their outstanding balance is automatically forgiven 30 years after it became eligible for repayment. Also, the loans do not appear on their credit report. 

“The thing people worry about with debt is that they won’t be able to pay it back. The way this is structured means that is not a worry ever, and it doesn’t follow you around until your old age,” says Sam Bowman, Research Director at the Adam Smith Institute, a free-market think tank. 

Bowman finds it helpful to understand loan repayment as a tax. “You can either think of it as a graduate tax or it’s the best debt in the world,” he says. “It makes sense to think of it as a graduate tax, a specific kind of tax on a specific action that is designed to offset the cost of that action.”

Uncharted waters for repayment

The first students to take on the new, larger type of loans have yet to graduate, so it is hard to estimate what repayment rates are likely to be. However, the Institute for Fiscal Studies (IFS), an independent research center, is already projecting that 73 percent of students will not repay their loans in full. They believe the average amount written off will be around £30,000 ($50,500).

A report released in July by a committee of the British parliament reached similar conclusions. “By providing favourable terms and conditions on student loans, the Government loses around 45p [cents] on every £1 it loans out.” When the new policies were first announced in 2010, the government projected it would only lose 28p per £1 loaned out. The report notes that government loans to students are expected to total £330 billion by 2044. “We are concerned that Government is rapidly approaching a tipping point for the financial viability of the student loans system,” says the report.

By and large, students still think of themselves as having “real debt” for their education. “One valid criticism of the loan system is that students don’t realize how generous it is,” says Nick Hillman, director of the Higher Education Policy Institute. “Students think they’re paying for the entirety of their education when actually they’re not. Taxpayers are covering quite a lot of the cost.”

The IFS report notes that the lowest-earning 10 percent of graduates will only repay £3,879 (in 2014 prices). A survey earlier this year showed that 40 percent of graduates are still looking for a job 6 months after leaving university. If this trend continues, some graduates may never start earning £21,000.

A few savvy individuals are learning to work the system. British financial advisors encourage parents who could contribute to their child’s education to have their kid take out government loans instead. Martin Lewis, who runs the popular website moneysavingexpert.com, writes, “If a parent pays the £27,000 tuition fees upfront, and their child becomes a poet and never earns above £21,000, the whole £27,000 would have been wasted.”

The only people who can expect to repay their loans plus interest in full are the small group who take high-paying jobs soon after graduating and get regular pay increases for the next 30 years. These individuals are thinking hard about whether they need a degree. “The only income group that has gone to university less are the richest. That might be surprising, but what the debt does is it imposes some cost on people for going to university,” says Bowman. “So if they have other options, they take them. Maybe they could skip college and join their parent’s business or their parents can find them jobs.”

This is one immediate impact of the new loan scheme. There will undoubtedly be unintended consequences that may only become evident years or decades from now. For example, Britain may see an increase in the number of stay-at-home parents. Loan repayment is tied to an individual’s income. Spouse’s earnings are irrelevant. Child care is already very expensive. For some families, the extra 9 percent they would lose in loan repayments will be enough to push one parent out of paid employment.

Loans without borders

Loan repayments are collected by Her Majesty’s Revenue and Customs, the British equivalent of the IRS, via withholding from a person’s paycheck. This makes it fairly simple to collect money from anyone working for a British employer. Things become harder when a graduate leaves the country. 

“There is no way that the government can collect money from people who go abroad,” says Bowman. “There is a big incentive for them to stay away. Say you’re an English graduate and you go to America for a couple of years to work. If you have this debt waiting for you when you get home, there’s a big reason for you to stay abroad for as long as possible.”

The number of students who would actually permanently leave is probably very small. “It would be a much bigger problem than the student loan book if we were seeing Irish levels of emigration,” says Bowman. However, a determined few will be able to dodge repayment.

And then there’s the question of students who come to Britain from other European Union countries. Since 2006, EU law has required Britain to offer these students the same loan deals for tuition, though not for living costs. It is a tradition in British politics to blame problems that are largely homegrown on the widely-hated EU. As the issues with loan repayment have come to light, stories about EU students borrowing money and then “going to ground” have also been hitting the headlines.

This problem is still fairly small, since EU students have only been receiving loans since 2006. Hillman says that about half of EU students who study in Britain choose not to borrow or repay their loan in full before they leave the country. Many EU students enroll at British universities because they want to work in Britain later. Thus, they have a strong incentive to repay. However, data is now emerging that shows unpaid loans in the low millions. “The issue is less about what has happened to date but what might happen in the future because there aren’t many people yet who are liable to repay, but it’s growing all the time,” says Hillman. 

“If a French or Dutch person studies at a British university then goes home and gets a job, we can certainly chase them through the French or Dutch courts because they’ve signed a legal contract and they should repay,” Hillman says. “But the trouble is that it’s an incredibly expensive business. The person may owe £27,000, which is a lot of money, but chasing someone through the courts can easily cost that much.”

One way to address this problem would be an EU-wide agreement. “But there’s no real incentive for other European countries to do this because other European countries don’t use loans in the same way we do,” says Hillman. 

Relative improvement

Despite the problems, both Hillman and Bowman say the new system is an improvement over the way British higher education used to be funded. Tony Blair’s government only introduced tuition in 2004. “Before loans and fees came in, British taxpayers paid 100 percent of the cost of going to university. Now they don’t. But they still fund part of the loan cost,” says Hillman.

Bowman says it is important to remember the overall British context. “The alternative is not a kind of free market where you have everybody paying their own way and banks privately making loans to people. The alternative is going back to a situation where the government pays for everything, and that’s a disaster,” he says. “The political climate in the UK is very hostile to any kind of marketization of anything. That’s not going to change for a couple of years, at least until we’re growing rapidly, and we all feel rich and safe again.” 

Potential Solution

One interesting idea put forward by David Willetts, a Member of Parliament and former Minister of State for Universities, is to sell government student loans to universities, making them responsible for collecting repayment. This approach would address a problem that afflicts both American and British higher education: Universities collect tuition upfront and then have little incentive to ensure loans are repaid. 

Bowman supports the proposal. “Making universities responsible for whether people repay might make them more willing to turn people away if they’re not a great bet in terms of their future earning, and that might counteract some of the qualification inflation. Right now, you need a university degree for any job that isn’t blue collar manual labor.”

He believes Willetts’ idea is politically viable. “Britain has lots of middle-class people who think of themselves as being working-class. They feel like they’re fighting against the man when in reality they are the man. You could say to them that we don’t want people who haven’t gone to university picking up the bill in any way for people who have gone to university.” 

The only question is whether universities would go along with it. Right now, they have a very beneficial arrangement. 

Much will depend on how loan repayment rates develop in the next few years. Graduates will probably soon grasp that they have the best debt in the world. Maybe taxpayers will start to realize this debt isn’t such a good deal for them. 

ABOUT EMMA ELLIOTT FREIRE

Emma Elliott Freire is a freelance writer living in England. She has previously worked at the Mercatus Center, a multinational bank, and the European Parliament.

RELATED ARTICLE: Can You Pay Student Loans With a Credit Card?

EDITORS NOTE: This column with images is republished with permission. The featured image is courtesy of FEE and Shutterstock.

INFOGRAPHIC: How Unions Are Chewing Through Taxpayer Dollars

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Nicole Rusenko and Kelsey Harris write and graphically display on The Daily Signal:

Did you know your tax dollars are financing unions?

Thanks to what the federal government calls “official time,” government workers spent 2.4 million hours on union work in 2010. In fact, the Internal Revenue Service alone has 286 full-time employees who work exclusively for the National Treasury Employees Union.

Check out the infographic below for more details on whose special interests (and pockets) your money is going.

WARNING: This infographic may upset your stomach and shrink your wallet.

OfficialTime_Infographic_Rusenko-011

COMMENTARY BY

Portrait of Nicole Rusenko Nicole Rusenko@ncrusen20

Nicole Rusenko is a senior designer at The Heritage Foundation.

 

Portrait of Kelsey Harris

Kelsey Harris
Kelsey Harris is the visual editor at The Daily Signal and digital media associate at The Heritage Foundation.

Julio Gonzalez wants to expand Obamacare in Florida

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Dr. Julio Gonzalez is running for the Florida House of Representatives in District 74. The cornerstone of his campaign is his opposition, as a physician, to Obamacare. You would expect that Dr. Gonzalez would be against using any federal or state funds to expand Obamacare wouldn’t you? Well you may want to look at what Dr. Gonzalez stated in a Florida Conference of Catholic Bishops candidate questionnaire.

The Florida Conference of Catholic Bishops sent Dr. Gonzalez and his primary opponent Richard DeNapoli a candidate survey. One of the questions asked was:

COVERING THE UNINSURED: Using federal and state funds to decrease the percentage of uninsured Floridians by at least 50 percent?

Dr. Gonzalez responded:

SUPPORT

Candidate Comments: Only in situations where there are absolutely no viable alternatives available (a safety net). The state’s efforts should be directed at promoting ample opportunities and resources to our uninsured to obtain coverage for catastrophic conditions if they desire such coverage, and not to propagate the problem by having the federal or state governments artificially mask the problems of joblessness and poverty through patch-work solutions.

Richard DeNapoli responded:

OPPOSE

Candidate Comments: I am opposed to Obamacare and the current proposal to expand Medicaid because of the costs involved. If we reduce federal regulations and mandates on health insurance policies, the private sector will be able to offer more options for policies to address individual consumer needs.

Gonzalez on his campaign website states, “Repeal Obamacare.  Take care of our seniors by making sure Medicare remains vibrant and healthy.” How does this statement and his support for expanding coverage for the uninsured under Medicaid in Florida (a key provision of President Obama’s Affordable Care Act)  jive? Florida has opted out of Medicaid expansion.

Perhaps Dr. Gonzalez would like to clarify his comments to the voters of Sarasota/Charlotte County. Perhaps voters need to truly understand where District 74 candidates Gonzalez and DeNapoli stand on Obamacare and expanding Medicaid in the sunshine state.

UPDATE: The Florida Family Association sent out its voter guide for the District 74 race. Dr. Gonzalez did not respond to any of the questions posed by the Florida Family Association. You may view Richard DeNapoli’s responses by clicking here.

EDITORS NOTE: To see how your elected officials responded to the Florida Conference of Catholic Bishops candidate questionnaire click here.

Florida Comprehensive Planning: A Critical Analysis of the Sarasota County 2050 Plan

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If you Google the words “comprehensive plan Florida” you will get 11.6 million hits. Florida cities and counties by law have produced comprehensive plans. The Florida Department of Economic Opportunity has an entire submission and process to review local comprehensive plans.

Section 163.3191 of  Florida Statutes requires “At least once every 7 years, each local government shall evaluate its comprehensive plan to determine if plan amendments are necessary to reflect changes in state requirements in this part since the last update of the comprehensive plan, and notify the state land planning agency as to its determination.”

What we have is state bureaucrats overseeing local bureaucrats comprehensive plans to meet their criteria for comprehensive planning. The planners are planning for the planners who are planning for every property owner in Florida. All of this is amounts to one thing – the control of dirt.

He who controls Florida’s dirt, controls all Floridians

The sole victim of comprehensive planning is you. Whether you live here year around, are a snow bird, business owner, visitor or just passing through the sunshine state you are impacted.

Supporters of comprehensive planning are not just bureaucrats. Bureaucrats do not live in a vacuum.  They need supporters, like minded people who are willing to support their ever expanding efforts to control dirt. They need elected officials who are willing to, on their recommendations, pass ever more stringent rules, policies and local ordinances to control the dirt.

One man who knows all about dirt and comprehensive planning is John C. Minder.  John is the founder of Minder & Associates Engineering Corporation. Minder & Associates are certified land surveyors and engineers. John’s company has offices in Sarasota and Manatee Counties. His clients have been the victims of comprehensive planning.

John has decided to enter the political arena by running for the Sarasota County Commission in District 4. His campaign is focused on eliminating the Sarasota County 2050 Plan. Doing away with it entirely. A needed move according to Minder to stop the government control of property and to insure individual property rights.

I had the opportunity to sit down with John for nearly three hours. He educated me on how the Sarasota County 2050 Plan was created and how it is not working to benefit landowners, citizens and Sarasota’s economy.

Why is the Sarasota County 2050 plan bad for Sarasota County?

As John would likely put it “let me count the ways.” From the concept of “fiscal neutrality” to “five acre lots” East of Interstate 75 to the building of “villages”, the 2050 Plan stops economic growth by controlling the dirt. The Sarasota County 2050 Policy states:

Adopted on July 10, 2002, Sarasota 2050 creates a set of policies overlaid on top of the Comprehensive Plan’s Future Land Use Map of Sarasota County. It establishes an optional policy framework to enhance the livability of the County by preserving its natural, cultural, physical, and other resources with an incentive-based system for managing growth.

The 2050 Plan is about “future land use” (controlling dirt) and “managing growth” (by controlling dirt). The justification is to create a Utopia in Sarasota County by controlling all “natural, cultural, physical and other resources.” Comprehensive planning is all about control, not economic development. It “enhances livability” by controlling people’s lives and ability to live free from government.

In an email exchange between Minder, Dan Lobeck, an anti-growth advocate, and Lourdes Ramirez, District 4 Republican primary candidate for County Commission, we get a stark view of how like minded people, Lobeck and Ramirez, support the control of dirt. Minder questions land use East of I-75 and fiscal neutrality. Minder believes that banks will not finance five acre lot developments as currently restricted by the Sarasota 2050 plan. The email thread begins with Minder taking exception to the Lourdes Ramirez threat  “CONA is petitioning Sarasota County to leave the fiscal neutrality policy as is to ensure, as you stated, that the developments under Sarasota 2050 does pay its own way.” Minder calls fiscal neutrality “a bunch of nonsense.”

Minder notes that “The 2050 Plan with its ‘Fiscal Neutrality Nonsense’ in its present state only allows 5 Acre Lots outside of ‘the Villages’ and 5 Acre Lots are selling at the present time for $500,000 and up and that is not affordable housing.”

Lobeck responds with:

“The financing excuse is not tenable for at least two reasons.  First, the large developers most likely to build under Sarasota 2050 have the resources to pay fiscal neutrality exactions without financing, such as Pat Neal or Schroeder-Manatee.  Second, and perhaps most significantly, fiscal neutrality is now typically reevaluated in phases, and it would seem likely that a Village or other Sarasota 2050 development would or easily could be financed in phases.  It is this requirement for a “true up” report at each phase that the developers want to eliminate.”

What Lobeck fails to understand is that any costs for land development are passed along to the home buyer and businesses.

Ramirez states:

It’s pretty simple but I could see why you’re confused. Here is a simple explanation.

Let’s take a development that has 1000 acres that currently is a open use estate district: 1 unit per 5 acres. That is what the developer owns and according to our local laws is entitled to build. That 1000 acres will yield a total number of 200 homes. Get it?

This 1000 aces development with the right for 200 homes will not need a lot of government services. There will be limited amount of roads but no schools, firehouses or parks since there are only 200 homes in the development

Say our local government decides to offer as a generous gift – an opportunity to get a huge increase in density. They offer 5 units per acre so now that same 1000 acres can get 5000 units.

What a great gift! The developer can keep what they have (200 units) or get a mini-city (5000) units. But with 5000 households the county must now offer a fire station, more sheriff patrols, additional water, sewer services, lots of roads etc.

So the county states the development must pay for these extra government services if the the developer chooses to accept the gift of increase density. That is fiscal neutrality.

Sounds like a fair deal.

No, it is not a fair deal for the new home buyer.

Ramirez wants to make the homes more expensive by limiting the number that can be built per acre. This means that affordable housing, which is a goal of Sarasota County government, cannot be built. The more homes per acre, the lower the cost per home, the lower the price per home and the more affordable the housing. And, the more people paying taxes for the services provided. Lobeck and Ramirez are driving up the price of homes, stopping affordable housing and raising the costs on all Sarasotans. It is a lose, lose, lose for economic development.

The Sarasota 2050 plans benefits only bureaucrats whose jobs depend on finding new ways to control dirt. Lobeck and Ramirez are supporters of controlling dirt and thereby controlling the lives and life choices of current and future residents of Sarasota County. Want to know more? Have a chat with John Minder, he will explain it to you.

Florida Amendment 1: Danger — Wolves in Government Clothing

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videothumbnail-trailer1This past week I attended the film “The Florida Corridor Expedition: Everglades to Okefenokee” promoting the need for Floridians to spend an additional $19.5 Billion on land acquisition to expand wildlife corridors. The problem with the film is only one side was presented: The need to connect Florida’s wildlife corridors. What about the other side: Protecting private property rights of Floridians?

Wildlife corridors are non-taxable conservation lands where animals roam freely.

Although well done the film showed a trip from the Everglades to Georgia by a team of environmentalists (paid by tax dollars?). My question was how much land will be taken from Floridians to complete this dream and who’s dream is it anyhow? I fully understand and support reasonable conservation. I know that Florida has some of the most beautiful trails and Eco-systems in the world bringing millions of visitors each year but… There reaches a point when we realize humans and freedoms will be sacrificed to make this happen. Does that make sense?

Currently 40% of Florida is in some conservation scheme. In simple terms that means 40% of Florida is off the tax roles! Land in conservation pays no taxes to the community creating deficits made up by the community. Currently almost 65% of Broward and Miami-Dade counties fall in this category. Due to this lost revenue, these counties have the highest tax rates in the state.

The statement was made, “[T]he Amendment will not cost Floridians anything.” Audience question:

“If Doc Stamps are used to pay for this Amendment, what happens to the money Doc Stamps were supposed to fund programs for the poor and elderly?”

Their answer:

“50% of Doc Stamps were to be used for conservation but the money went into the general fund. We are asking for 33% so we are asking for less.” That answer makes no sense.

What difference does it make what pocket you are taking money from? if you are taking money designated for another program, like poor and elderly that program will have to find money some place else. The tax payer will be asked to now fund the poor and elderly or else.. If you say no, you will be demonized because you don’t like the poor and elderly. I asked:

If land will be taken from the tax roles and put into non taxable conservation programs, who will make up the lost revenue to the counties?”

Their answer:

“If people move into the counties the county will have to provide more services like schools and police.”

New Mexico kid cages

Kid cages in New Mexico.

That made no sense. If people move into the counties, PEOPLE PAY TAXES and the tax base will improve. I asked Mr Bear, Panther and Alligator to pay their fair share of taxes but got NO answer. Let’s see how this program works in New Mexico at a wolf sanctuary.

Steve Foley from the California Report writes, “In parts of New Mexico children have no choice but to wait for their school bus inside of cages. These ‘kid cages’ are the result of government agencies abuse of the Endangered Species Act. The United States Fish & Wildlife Service has placed wolves in populated areas where they have become an economic burden for small business owners, infringed upon private property rights, burdened taxpayers with management costs, and placed fear in the hearts of those who have to deal with them on a daily basis.”

VIDEO: Wolves in Government Clothing

Ummm, people in cages while animals run free! Sounds like fun.

We are lucky in Florida. We get to see the results of some of these government policies and decide if we like the results before we amend the Florida constitution with yet another program that sounds great on paper but does not work in reality.

Does Florida need another slush fund scheme without oversight giving more money to groups dedicated to stealing your land? Florida is in the top 10 for political corruption. All groups supporting this amendment have ties to the United Nations. The UN believes that land should be held by the government not in the hands of ordinary people.

There is only one goal of the groups supporting this Amendment: ELIMINATE PRIVATE PROPERTY.

To learn more about Amendment 1 click on this link. 

Which Strategy Really Ended the Great Depression? by Burton Folsom

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“World War II got us out of the Great Depression.” Many people said that during the war, and some still do today. The quality of American life, however, was precarious during the war. Food was rationed, luxuries removed, taxes high, and work dangerous. A recovery that does not make—as Robert Higgs points out in Depression, War, and Cold War.

Franklin Roosevelt recognized that the war only provided a short-term fix for the economy—and a very costly one at that. What would happen after the war—when 12 million troops came home and the strong demand for guns, bullets, tanks, and ships ceased?

Roosevelt envisioned a New Deal revival. He had created the National Resources Planning Board (NRPB) in 1939 and urged it during the war to plan for peacetime. The NRPB leaders believed that government planning was necessary to promote economic development. They consciously (and sometimes unconsciously) followed ideas popularized in 1936 by John Maynard Keynes in his bestselling book, The General Theory of Employment, Interest and Money.

Capitalism was inherently unstable, Keynes argued, and would rarely provide full employment. Therefore government intervention was needed, especially in recessions, to spend massive amounts of money on public works, which would create new jobs, expand demand, and rebuild consumer confidence. Yes, government would need to run large deficits, but economic stability was society’s reward. If government planners could manage aggregate demand through public works, the boom-bust business cycle could be flattened and economic development could be managed in the national interest. No more Great Depressions. Man could indeed be master of his economic future.

Before and during the war Keynes’s ideas swept through the United States and first transformed the universities, then the political culture of the day. With statistics in hand and a near reverence for government, the Keynesians were the new generation of planners. They wanted to remake society. Not entrepreneurs, but economists were needed to gather data, plan government programs, and regulate economic development. Paul Samuelson, for example, a 21-year-old economics student, was cautious at first, but then euphoric after Keynes’s book was published. “Bliss was it in that dawn to be alive, but to be young was very heaven,” Samuelson wrote. Other economists soon accepted Keynes, and by the 1940s his ideas dominated the economics profession. In 1948, Samuelson would defend Keynes by writing the best-selling economics textbook of all time.

Planning for Peace

Those on the NRPB were among the excited disciples of Keynes and economic planning. The war itself seemed to be evidence that government jobs had pulled the U.S. economy out of the Depression. Now the economists and planners needed to take the nation’s helm to plan for peace.

According to Charles Merriam, vice president of the NRPB, “[I]t should be the declared policy of the United States government, supplementing the work of private agencies as a final guarantor if all else failed, to underwrite full employment for employables. . . .” That idea launched what Merriam and the NRPB dubbed “A New Bill of Rights.” FDR would call it his Economic Bill of Rights. Included was a right to a job “with fair pay and working conditions,” “equal access to education for all, equal access to health and nutrition for all, and wholesome housing conditions for all.”

New Bill of Rights

FDR viewed this Economic Bill of Rights as his tool for guaranteeing employment for veterans (and others) after World War II. But it was more than a mere jobs ploy; it had the potential to transform American society. The first Bill of Rights, which became part of the Constitution, emphasized free speech, freedom of the press, and freedom of religion and assembly. They were freedoms from government interference. The right to speak freely imposes no obligation on anyone else to provide the means of communication. Moreover, others can listen or leave as they see fit.

But a right to a job, a house, or medical care imposes an obligation on others to pay for those things. The NRPB implied that the taxpayers as a group had a duty to provide the revenue to pay for the medical care, the houses, the education, and the jobs that millions of Americans would be demanding if the new bill of rights became law. In practical terms this meant that, say, a polio victim’s right to a wheelchair properly diminished all taxpayers’ rights to keep the income they had earned. In other words, the rights announced in the Economic Bill of Rights contradicted the property rights promised to Americans in their Declaration of Independence and in the Constitution.

FDR promoted his Economic Bill of Rights in his State of the Union message in 1944, but he died before the war ended. Shortly before his death, Senator James Murray (D-Mont.) introduced a full-employment bill into the Senate for discussion. The bill committed the government in a general way to provide jobs if unemployment became too high. Many leading Democrats and economists supported Murray’s bill. “In this session of Congress,” The New Republic reported, “one of the first bills to be introduced will no doubt be the full employment bill of 1945, designed to carry out item number one in the Economic Bill of Rights.” The Nation joined The New Republic in endorsing the full-employment bill. “Mr. Roosevelt’s program,” it concluded, “is squarely based on the best economic authority available. It is entirely consistent with the economic doctrines of the distinguished British economist Lord Keynes.”

On September 6, 1945, President Harry Truman gave a major speech in which he supported the Economic Bill of Rights, especially a full-employment bill. Most congressmen, however, rejected both. Rep. Harold Knutson (R-Minn.) said, “Nobody knows what the President’s full employment bill will cost American taxpayers, but the aggregate will be enormous.”

Instead, Knutson and many other congressmen favored cutting tax rates and slashing the size of government as the best measure to restore economic growth. Senator Albert Hawkes (R-N.J.) even argued that “the repeal of the excess-profits tax, in my opinion, may raise more revenue for the United States than would be raised if it were retained.” Hawkes proved to be prophetic. After vigorous debate Congress scrapped the Economic Bill of Rights and cut tax rates instead. American business then expanded, revenues to the Treasury increased to balance the federal budget, and unemployment was only 3.9 percent in 1946 and 1947. The Great Depression was over.

20121124_Folsom20121ABOUT BURTON FOLSOM

Burton Folsom, Jr. is a professor of history at Hillsdale College and author (with his wife, Anita) of FDR Goes to War.

EPA Still Wants to Garnish Your Wages Without a Court Order

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A few weeks ago, EPA quietly tried to reinterpret its authority and wanted to garnish wages from those who owe it a debt. After a storm of criticism from Members of Congress and the public, EPA pulled back.

However, the agency is still trying to grant itself this power, only this time it’s going through the standard notice-and-comment process that most federal regulations go through.

What’s is the problem EPA wants to solve by having the ability to dig to go after your wallet? Will this stop polluters? Is EPA inundated with deadbeats?

Apparently not, according to Catrina Rorke and Sam Batkins at the American Action Forum who looked at EPA’s data.

They point out that, over the past six years, EPA has imposed more than $2.3 billion in “non-major” fines against companies and individuals that committed “infractions that do not involve large facilities emitting tons of toxic pollutants annually.”

However, Rorke and Batkins found, “the majority of fines for individuals involve paperwork infractions – not environmental contamination.” Individuals or businesses were fined for failing to file notification or reports with EPA.

And as for a delinquency problem, here’s their key finding:

[T]he average length of time that individuals were delinquent paying EPA was zero quarters. In other words, people generally pay their fines on time.

So why does EPA want to be able to garnish an individual’s wages? Based on its data, it’s not to ensure a cleaner environment nor solve delinquency problems. Roark and Batkins conclude (correctly in my view):

EPA’s proposal to grant itself wage garnishment authority more closely resembles a power grab than an appropriate administrative step to rectify an observed issue in their fine repayment process.

Stay tuned.