Tag Archives: Thomas Sowell

Sowell: Is Democracy Viable?

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Is Democracy Viable?
By Thomas Sowell

Those who see hope in the Middle East uprisings seem to assume that they will lead in the direction of freedom or democracy. There is already talk about the “liberation” of Egypt, even though the biggest change there has been that a one-man dictatorship has been replaced by a military dictatorship that has suspended the constitution.

Perhaps the military dictatorship will be temporary, as its leaders say, but we have heard that song before. What we have also heard, too many times before, is the assumption that getting rid of an undemocratic government means that it will be replaced by a freer and better government.

History says otherwise. After Russia’s czars were replaced by the Communists, the government executed more people in a day than the czars had executed in half a century. It was much the same story in Cuba, when the Batista regime was replaced by Castro and in Iran when the Shah was replaced by the Ayatollahs.

It is not inevitable that bad regimes are replaced by worse regimes. But it has happened too often for us to blithely assume that overthrowing a dictator means a movement toward freedom and democracy.

The fact that Egyptians or others in the Middle East and elsewhere want freedom does not mean that they are ready for freedom. Everyone wants freedom for himself. Even the Nazis wanted to be free to be Nazis. They just didn’t want anybody else to be free.

There is very little sign of tolerance in the Middle East, even among fellow Muslims with different political or religious views, and all too many signs of gross intolerance toward people who are not Muslims.

Freedom and democracy cannot be simply conferred on anyone. Both have preconditions, and even nations that are free and democratic today took centuries to get there.

If there was ever a time when people in Western democracies might be excused for thinking that Western institutions could simply be exported to other nations to create new free democracies, that time has long passed.

It is easy to export the outward symbols of democracy– constitutions, elections, parliaments and the like– but you cannot export the centuries of experience and development that made those institutions work. All too often, exported democratic institutions have meant “one man, one vote– one time.”

We should not assume that our own freedom and democratic form of government can be taken for granted. Those who created this country did not.

As the Constitution of the United States was being written, a lady asked Benjamin Franklin what he and the other writers were creating. He replied, “A republic, madam– if you can keep it.” Generations later, Abraham Lincoln also posed it as a question whether “government of the people, by the people and for the people” is one that “can long endure.”

Just as there are nations who have not yet developed the preconditions for freedom and democracy, so there are some people within a nation who have not. The advance toward universal suffrage took place slowly and in stages.

Too many people, looking back today, see that as just being biased against some people.

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Reckless Spending

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From National Review:

Reckless Spending
Barack Obama isn’t stupid. High-speed rail is.

By Thomas Sowell

Nothing more clearly illustrates the utter irresponsibility of Barack Obama than his advocacy of “high-speed rail.” The man is not stupid. He knows how to use words that will sound wonderful to people who do not bother to stop and think.

High-speed rail may be feasible in parts of Europe or Japan, where the population density is much higher than in the United States. But, without enough people packed into a given space, there will never be enough riders to repay the high cost of building and maintaining a high-speed rail system.

Building a high-speed-rail system between Los Angeles and San Francisco may sound great to people who don’t give it any serious thought. But we are a more spread-out country than England, France, or Japan. The distance between Los Angeles and San Francisco is greater than the distance from London to Paris — by more than 100 miles.

In Japan, the distance between Tokyo and Osaka is comparable to the distance between Los Angeles and San Francisco. But the population of Osaka alone is larger than the combined populations of Los Angeles and San Francisco — and Tokyo has millions more people than Osaka. That is why it can make sense to have a “bullet train” running between Osaka and Tokyo, but makes no sense to build one between Los Angeles and San Francisco.

However little President Obama knows or cares about economics, he knows a lot about politics — and especially political rhetoric. “High-speed rail” is simply another set of lofty words used to justify continued expansion of government spending. So are words like “investment in education” or “investment” in any number of other things, which serve the same political purpose.

Who cares what the realities are behind these nice-sounding words? Obama can leave that to the economists, the statisticians, and the historians. His point is to win the votes of people who know little or nothing about economics, history, or statistics. That includes a lot of people with expensive Ivy League degrees.

To talk glibly about spending more money on “high-speed rail” when the national debt has just passed a milestone by exceeding the total value of our annual output, for the first time in more than half a century, is world-class chutzpa. The last time the U.S. national debt exceeded the value of our entire annual output, it was due to the cost of fighting World War II.

When World War II ended, in less than four years of American participation, we began paying down the national debt. But our current national debt has been expanding by leaps and bounds in relatively peaceful times — and with no sign of an end in sight for the next decade.

Since more than 40 percent of our national debt is owed to foreigners, this means that goods and services produced by Americans, equal in value to more than 40 percent of our current output, will have to be sent overseas, free of charge, by either this generation or the generations that follow.

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Tax Rates v. Tax Revenues and the Tax Compromise of 2010

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The Leftist rallying cry ‘tax cuts for the rich’ is predicated upon intentional distortions. In search of votes, Democrats passionately decry the moral injustice of ‘rich’ people being permitted to keep and accumulate the fruits of their labor. If only taxes were higher, the Left contends, the government would have the necessary funds and power to impose equality on ‘the masses.’

The moral argument for lower taxes is quite simple: people are entitled to retain their private property. Taxes should be used to fund the defined roles of government and nothing else. Social engineering and wealth redistribution to favored constituencies are not what taxes are supposed to be used for.

The economic argument has been proven throughout the course of history. To a point, lower tax rates result in larger revenues for the federal government. Thomas Sowell recently wrote a great article on this topic:

…High tax rates do not necessarily result in high tax revenues to the government. “It is time to face the facts,” he said. Merely having high tax rates on large incomes will not bring in more tax revenues to the treasury, because of “the flight of capital away from taxable investments.”

This was all said in 1924, in Mellon’s book, “Taxation: The People’s Business.” Yet here we are, more than 80 years later, still not facing those facts.

It is not just a question of what Andrew Mellon said. It is a question of hard facts, easily checked in official documents available to all– and ignored all these years.

Internal Revenue Service data show that there were 206 people who reported annual incomes of one million dollars or more in 1916. But, as the tax rate on high incomes skyrocketed under the Woodrow Wilson administration, that number plummeted to just 21 people reporting a million dollars a year in income five years later…

Right after Congress enacted the cuts in tax rates that Mellon had been urging, there were suddenly 207 people reporting taxable incomes of a million dollars or more in 1925. As Casey Stengel used to say, “You could look it up.” It is on page 21 of an Internal Revenue publication titled “Statistics of Income from Returns of Net Income for 1925.”

Where had all the income of those millionaires been hiding? In tax-exempt securities like state and local bonds, among other places. Mellon had urged Congress to end tax exemptions for such securities, even before he got them to cut tax rates. But he succeeded only with the latter, and only after a political struggle with those who made the same kinds of arguments that are still being made today by those who cry out against “tax cuts for the rich.”

…The government, which collected less than $50 million in taxes on capital gains in 1924, suddenly collected well over $100 million in capital gains taxes in 1925. At lower tax rates, it no longer made sense to keep so much invested in tax-exempt securities, when more money could be made by investing in the economy.

As for “the rich”– who really were rich in those days, when $100,000 was worth more than a million dollars is worth today– those in the highest income brackets paid 30 percent of all taxes in 1920 and 65 percent of all taxes by 1929, after “tax cuts for the rich.”

How can that be? Because high tax rates on paper, that many people avoid, often does not bring in as much tax revenue as lower tax rates that more people actually pay, after it is safe to come out of tax shelters and earn higher rates of taxable income.

The investors do this because it makes them better off, on net balance, even after they pay more money in taxes on incomes that have gone up. More important, the economy benefits when there is more investment in things that create more jobs and rising output…

As John Adams said, “facts are stubborn things.” In this case, the facts support lower taxes.

Since 2000, Democrats have railed against the ‘Bush tax cuts for the rich.’ Now Democrats claim that the extension of the Bush tax rates, by a Democrat controlled Congress, and a Democrat president, is a great victory for Obama and his party.

Preventing one of the largest tax rate hikes in history is a victory for the American people and conservative ideas. In no way can an acquiescence by the Left of this magnitude truly be seen as a victory for the Left.

However, reality never seems to get in the way of the political class. In all likelihood, by 2012 President Obama will be touting the success of the ‘Obama tax cuts.’ In 1996 Bill Clinton won reelection by running on all the successes of the Contract with America – the very same document Clinton had called the “Contract on America,” likening conservative ideas to a hit man’s contract. Just like Clinton, Obama will try to claim responsibility for the successes of Republican ideas, which he will fight bitterly against.

The More the Plans Fail, the More the Planners Plan

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Another gem for the sage of Palo Alto:

A Non-Prediction

By Thomas Sowell

When people learn that you are an economist, they often want you to predict which way the economy is going. There seem to be more than the usual number of calls for such predictions lately. But an economist should be more aware than others are of how hazardous such predictions can be.

One reason is that what happens in the economy is affected by what politicians do in Washington— and who can predict what politicians will do?

However, let me go out on a limb, and try to predict what politicians will not do.

What would probably get the economy recovering fastest and most completely would be for the President of the United States and Congressional leaders to shut up and stop meddling with the economy. But it is virtually impossible that they will do that.

Think about telling all the millions of people who have lost their jobs, their homes or their businesses: “I really messed you up but, hey, nobody’s perfect. So I’m going to leave things alone now.” In fact, that would be hard even to tell yourself.

If the stimulus isn’t working, the true believers have to believe that it is only because it hasn’t been tried long enough, or with enough money being spent.

There are always calls for the government to “do something” when things are going bad. Those who make such calls have almost never bothered to check out what actually happens when the government does something, as compared to what happens when the government does nothing.

It is not just free market economists who think the government can make a mess bigger with its interventions. It was none other than Karl Marx who wrote to his colleague Engels that “crackbrained meddling by the authorities” can “aggravate an existing crisis.”

The history of the United States is full of evidence on the negative effects of government intervention. For the first 150 years of this country’s existence, the federal government did not think it was its business to intervene when the economy turned down.

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Two Great Articles From Thomas Sowell

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Thomas Sowell is one of the best political commentators. Period. Here are two great articles he penned this week:

Democrats Disillusioned

The president’s cynicism on racial issues is beginning to bother members of his own party.

You expect Republican politicians to criticize Democratic administrations and vice versa. But when Democrats start criticizing Democratic administrations, that is news. Someone once said that the headline “Dog bites man” is not news, but “Man bites dog” is. We are now starting to get “Democrat bites Democrat” news.

Longtime Democratic pollsters Patrick Caddell and Douglas Schoen last week took on one of Pres. Barack Obama’s most bitter betrayals of his campaign rhetoric and the high hopes of people who voted for him.

Their op-ed piece in the Wall Street Journal dealt with race, and it pulled no punches: “Rather than being a unifier, Mr. Obama has divided America on the basis of race, class and partisanship. Moreover, his cynical approach to governance has encouraged his allies to pursue a similar strategy of racially divisive politics on his behalf.”

Cynical? This man with the lofty rhetoric and sermonizing style? Only if you follow his deeds instead of merely his words.

Part of the polarization that Barack Obama has caused among the American public has been due to the fact that some people do not look behind rhetoric and symbolism. Such people are prime candidates to become part of the Obama cult. Those who look only at deeds tend to become critics. But those who closely follow both his words and his deeds are the most outraged of all, because of the gross contradictions between those words and those deeds.

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This one is also great:

The Obama Administration’s Real Bottom Line

It’s political, not budgetary, and the CBO is calling them on it.

Rumors of congressional Democrats privately expressing disapproval of the Obama administration’s actions and policies have been given more credence by such things as Speaker Nancy Pelosi’s public criticism of White House spokesman Robert Gibbs. But when two longtime Democratic pollsters, Patrick Caddell and Douglas Schoen, called President Obama “cynical” and “racially divisive,” that was a dramatic statement. It was like saying that the emperor has no clothes.

A much more rhetorically subdued but nevertheless devastating implicit criticism of current government spending policies came from an even more unlikely source: the Congressional Budget Office, whose director is a Democrat.

Without naming names or making political charges, the Congressional Budget Office last week issued a report titled “Federal Debt and the Risk of a Fiscal Crisis.” The report’s dry, measured words paint a painfully bleak picture of the long-run dangers from current runaway government deficits.

The CBO report points out that the national debt, which was 36 percent of GDP three years ago, is now projected to be 62 percent of GDP at the end of fiscal year 2010 — and to rise in future years.

Tracing the history of the national debt back to the beginning of the country, the CBO finds that the national debt did not exceed 50 percent of GDP even when the country was fighting the Civil War, World War I, or any other war except World War II. Moreover, a graph in the CBO report shows the national debt going down sharply after World War II as the nation began paying off its wartime debt when the war was over.

By contrast, our current national debt is still going up and may end up in “unfamiliar territory,” according to the CBO, reaching “unsustainable levels.” They spell out the economic consequences — and it is not a pretty picture.

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The Sins-and-Grievances Approach

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A great article by Thomas Sowell on the stupidity of multiculturalism:

One of the most ominous developments of our time has been the multicultural dogma that all cultures are equal. It is one of the many unsubstantiated assertions that have become fashionable among self-congratulatory elites, with hard evidence being neither asked for nor offered.

But, however much such assertions minister to the egos of the intelligentsia and the careers of politicians and race hustlers, the multicultural dogma is a huge barrier to the advancement of groups who are lagging economically, educationally, and otherwise.

Once you have said that the various economic, educational, and other “gaps” and “disparities” of lagging groups are not due to either genes or cultures, what is left but the sins of other people?

Sins are never hard to find among any group of human beings. But whether that actually helps those who are lagging or just leads them into the blind alley of resentment is another question.

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Time to ban dihydroxymonoxide

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This just goes to show how gullible people are when they’ve had the environmental agenda forcefed to them by the left.

Thomas Sowell writes:

A woman with a petition went among the crowds attending a state fair, asking people to sign her petition demanding the banning of dihydroxymonoxide. She said it was in our lakes and streams, and now it was in our sweat and urine and tears.

She collected hundreds of signatures to ban dihydroxymonoxide — a fancy chemical name for water. [...] Much of the stupidity we see today is induced by our educational system, from the elementary schools to the universities. In a high-tech age that has seen the creation of artificial intelligence by computers, we are also seeing the creation of artificial stupidity by people who call themselves educators.