Economic Malaise: Symptom of A Greater Malady

http://www.victorhanson.com/articles/thornton022411.html

I am focusing on the economy lately, because the problems with the economy are really problems with greater society as a whole. We cannot “fix” the economy until we become more honest, more realistic, more law-abiding and more educated.

Here is a quote from Bruce Thornton on Victor Davis Hanson’s blog:

“Many liberals talk as if money is something the government creates and lets rich people keep too much of. Of course, people create wealth — the government just confiscates it. Thus the liberal solution to economic straits is to “tax the rich,” as a sign in Madison has it. But we already tax the “rich”: the top 5% of tax filers in 2008 paid 58.7% of all federal income taxes, more than the bottom 95% combined. The bottom 50% paid 2.7%. As many have pointed out, our problem isn’t that we tax too little but that we spend too much. Increasing government spending, as Obama has done over the past two years on pork and entitlements, at the same time he has piled more impediments and disincentives on the entrepreneurs and businesses that create the wealth in the first place, is a recipe for the sorts of fiscal problems troubling the economies of several countries in the EU.

One doesn’t need a degree in economics to understand this dynamic of capitalist wealth creation, the best economic system mankind has found for expanding and distributing wealth. But many liberals still don’t get it. In fact, their economic thinking reminds me of that episode of The Simpsons in which Homer discovers he can earn money from recycling grease, and so starts frying up bacon to create more grease:

Clerk: Four pounds of grease. That comes to… sixty-three cents.

Homer: Woo-hoo!

Bart: Dad, all that bacon cost twenty-seven dollars.

Homer: Yeah, but your mom paid for that.

Bart: But doesn’t she get her money from you?

Homer: And I get my money from grease. What’s the problem?

This sort of economic magical thinking has characterized the unholy alliance of public employee unions and state legislators, including at times Republicans. State functionaries can lavish generous benefits on state workers because it isn’t their money, and because in the short-term there are no market forces to punish their improvidence with financial ruin. So why not buy political supporters and donors? Just keep on fleecing the taxpayers to pay for the binge. It’s moral hazard on steroids, and eventually must end where all Ponzi schemes end.”

Thornton is speaking specifically about the Wisconsin imbroglio. Everywhere I look I see evidence of dishonesty, surreal behavior, failure to follow the law and failure to even try to understand the facts behind the issues. In Wisconsin legislators flee to avoid having to vote. That is shirking responsibility and probably breaking the law. The “Tax the Rich” meme is both a stark misunderstanding of where taxes come from and an appeal to class war and interpersonal envy. Failure to hold Wall Street accountable for the criminal fraud that has brought us to this point is a collapse of moral structure. Are you looking for leadership and moral courage? Don’t look to Congress, whose members (of both parties) have taken the easy road for decades and over the last decades have failed to enforce the laws in many areas.

Pick almost any area of contention and you will find that Congress has shirked its responsibility. Re-read Larry Doyle’s manifesto from yesterday and then you will see what the challenge is and it is daunting.

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