Republican Economics in Hindsight

The following was copied from a newsletter I receive often regarding our economy and current world economics.  The quotes presented here below were intended to offset the grossly ‘spun’ numbers presented by two economists from Berkley, California.

…  a now-famous study by Thomas Piketty and Emmanuel Saez, professors of economics at the Paris School of Economics and the University of California, Berkeley, respectively.  Whether the issue is climate change or income inequality, however, problems with the underlying data significantly distort the debate.  [Click on ‘study‘ above to read the full report.  The retort to this study follows.]

…  America is the freest and most dynamic society in history, and freedom and equality of outcome have never coexisted anywhere at any time.  Here the innovator, the first mover, the talented and the persistent win out—producing large income inequality.  The prizes are unequal because, in our system, consumers reward people for the value they add.  Some can and do add extraordinary value, others can’t or don’t [won’t?].

How exactly are we poorer because Bill Gates, Warren Buffett and the Walton family are so rich?  Mr. Gates became rich by mainstreaming computer power into our lives and in the process made us better off.  Mr. Buffett’s genius improves the efficiency of capital allocation and the whole economy benefits.  Wal-Mart stretches our buying power and raises the living standards of millions of Americans, especially low-income earners.  Rich people don’t “take” a large share of national income, they “bring” it.  The beauty of our system is that everybody benefits from the value they bring.

Yes, income is 24% less equally distributed here than in the average of the other 34 member countries of the Organization for Economic Co-operation and Development (OECD).  But OECD figures show that U.S. per capita GDP is 42% higher, household wealth is 210% higher and median disposable income is 42% higher.  How many Americans would give up 42% of their income to see the rich get less?

Vast new fortunes were earned in the 25-year boom that began under Reagan and continued under Clinton.  But the income of middle-class Americans rose significantly.  These incomes have fallen during the Obama presidency, and not because the rich have gotten richer.  They’ve fallen because bad federal policies have yielded the weakest recovery in the postwar history of America.

Yet even as the recovery continues to disappoint, the president increasingly turns to the politics of envy by demanding that the rich pay their “fair share.”  The politics of envy may work here as it has worked so often in Latin America and Europe, but the economics of envy is failing in America as it has failed everywhere else.

Mr. Gramm, a former Republican senator from Texas, is a visiting scholar at the American Enterprise Institute.  Mr. Solon was a budget adviser to Senate Republican Leader Mitch McConnell and is a partner of US Policy Metrics.

Imagine if we could get out of the current ‘Carter era’ mentality economics and return to the Reagan approachYou too could possibly be a mere 42% richer in income in the near future..!?  You’d probably love that compared to the current estimated 6% increase (high estimate) the average American has received since 2009!!


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