Happy Father’s Day!

To celebrate, here’s our annual Father’s Day pic of a coal miner and his daughters. Those girls were living in poverty-stricken 1970s Appalachia, but unlike one-third of American kids today, they at least they had their biological dad, or what was left of him, living at home. #MalePrivilege


A Democrat Dilemma

Democrats historically have shown an amazing ability to keep antagonistic groups within the same political coalition. For instance, the coalition that elected Franklin Delano Roosevelt included northern liberals, Catholics, and Jews, along with southern conservatives and KKK members who were avowedly anti-Jew and anti-Catholic. Yet somehow, they all voted the same way.

The latest challenge for the Democrats appears to be keeping their Islamist constituency from murdering their gay homosexual constituency.

Good luck with that.


Smithsonian Historian Doesn’t Know Much About Voting History

Jon Grinspan, a historian at the Smithsonian, has a piece in the New York Times describing in glowing terms the prominent role of young adults in 19th century U.S. elections. Although a professional historian, Grinspan seems not to understand why voter turnout declined precipitously in the early 20th century.

Campaigners enlisted youths to hand out ballots, round up drunks and mob rival demonstrations. In an era of close elections and few independents, “virgin voters” became decisive, lifelong partisans. Though they condescendingly treated youths as political tools, many followed Lincoln’s advice to “gather up all the shrewd, wild boys about town, whether just of age or a little under age.”

Politicians needed young people, and vice versa — together they fueled an enormous system that blurred the line between the political and the personal. When Americans think about 19th-century democracy, we imagine earnest statesmen or cigar-chomping bosses. But the real force driving this experiment in popular government was often a gawky, anxious, ambitious 21-year-old.

But something went wrong after 1900. Turnout crumbled, from roughly 80 percent in 1896 to 48.9 percent by 1924, as new voters stopped joining. With a stable school system and a welcoming teenage culture, youths needed politics less. At the same time, elite campaigners abandoned working-class young people, preferring hotel banquet halls to public barbecues. There were, to be fair, fewer stabbings on Election Day, but also fewer bonfires on election night.

The reason for the decline in voter turnout after 1900 is no mystery, and it has little to do with teenage culture, banquet halls, or a “stable school system.” Turnout declined dramatically for two primary reasons: registration requirements and Jim Crow.

Prior to the 1890s, there typically existed no requirements that people register in order to vote. Anybody could show up, ballot in hand, and cast a vote on election day. Since names of voters were not checked against a list, much fraud took place, especially in urban areas, as people hopped from one polling place to another to cast multiple ballots. All this fraudulent voting inflated the vote counts, and thus boosted the turnout rate over the 80 percent mark. To combat this fraud, cities in the 1890s started requiring registration, which significantly reduced the vote count and therefore the turnout rate.

The other major change that depressed turnout in the early 20th century was Jim Crow. Southern states enacted poll taxes and other measures to disenfranchise black voters. These measures all but eliminated black turnout. They also had the effect of depressing white turnout, because the South became effectively a one-party state with uncompetitive elections. People saw not much point in voting when the victory of the Democrat candidate was a foregone conclusion. As a result, turnout during this era was much lower in the South than in the North. The very low turnout rate in the South, however, tended to reduce the computed turnout rate for the nation as a whole.

We would have thought that a historian from the Smithsonian would have known these basic facts of U.S. voting history. Although perhaps we shouldn’t be too surprised, since this performance is consistent with the level of competence we’ve come to expect from government employees.

Six Lies about U.S. Schools (Bumped)

At thefederalist.com, Joy Pullmann puts together a good list of “Six Lies Most People Believe about U.S. Schools.” We have to agree in particular with lie number 1 on the list:  “America’s rich, suburban schools are high quality.”

The Global Report Card has recently layered specific, nationwide figures upon broader comparisons that have long demonstrated our mediocrity. Its authors give Beverly Hills as one example. It represents most affluent suburban districts, which Americans typically think contain great schools. But they don’t. “If Beverly Hills were relocated to Canada, it would be at the 46th percentile in math achievement, a below-average district. If the city were in Singapore, the average student in Beverly Hills would only be at the 34th percentile…” The schools everyone thinks are so great are only so because we compare them to our truly awful urban districts, rather than to actual peers.

Unfortunately, our own personal experience concurs with this assertion. We are constantly coming across students who attended allegedly good high schools but who nonetheless demonstrate a poor grasp of proper high school material. In one recent case, a student, while sitting in our office, related to us that his parents moved to the suburbs precisely so that he would not need to attend the awful Chicago city schools. But only moments later, this same student, while going over some economics problems, revealed a distinct lack of proficiency with middle school (not high school–middle school) level math.

Further evidence that suburban schools are deficient is the fact that, as reported previously on this site, the proportion of high-school seniors who test proficient in U.S. history is only 12%. For the figure to be this low there must be an awful lot of above-average students at above-average schools who are not learning what they’re supposed to.

Apparently, parents are either not willing or not able to judge their children’s schools on the basis of academic substance. It seems that parents judge the school “good” so long as the child seems reasonably happy, and the child doesn’t get pregnant, or victimized by crime, or fall in with the stoner crowd. Talk about defining success down.

We could say a lot more, but it’s usually better to let Milton Friedman do the talking. Here is Friedman’s classic video, “What’s Wrong with our Schools?”

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Should the rich give back? (Revised)

In recent years, we have heard much rhetoric aimed at demonizing “the 1%” of richest Americans, who are supposedly guilty of somehow victimizing “the 99%.” We even saw a bumper sticker recently that proclaimed “I am the 99%” as if that were something to be proud of. Even more appalling, we have heard from students that some of this rhetoric has even found its way into classrooms at UD. And three years ago we all had to endure an election campaign during which we were told repeatedly that the rich were not “paying their fair share.”

Is that right? Do the richest 1% owe something to the other 99%? Should the rich have to “give back?”

Logically, the rich should only have to give back if they have taken something. But is that how Bill Gates and Steve Jobs got rich? By taking? No, clearly not. They got rich by innovating and producing products that people wanted and that greatly improved people’s lives. The fact is that virtually all progress in our economy and in our society comes from a tiny minority of talented, hard-working, and successful entrepreneurs, scientists, and engineers. The rest of the population reaps the benefit of the improvements brought about by this tiny minority. On this point, Harry Binswanger, writing recently in Forbes, quotes the famous novelist Ayn Rand:

When you work in a modern factory, you are paid, not only for your labor, but for all the productive genius which has made that factory possible: for the work of the industrialist who built it, for the work of the investor who saved the money to risk on the untried and the new, for the work of the engineer who designed the machines of which you are pushing the levers, for the work of the inventor who created the product which you spend your time on making . . .

Or as someone once aptly put it, no poor person can give you a job.

Similarly, in their classic treatise Free to Choose, Milton and Rose Friedman note that

economic and social progress do not depend on the attributes or behavior of the masses. In every country, a tiny minority sets the pace, determines the course of events. In the countries that have developed most rapidly and successfully, a minority of enterprising and risk-taking individuals have forged ahead, created opportunities for imitators to follow, have enabled the majority to increase their productivity.

The argument is also laid out clearly in the brief video below, produced by the Atlas Network. The video highlights the essential point that profits are moral, so long as they arise through voluntary exchange. Profits become morally dubious when they involve involuntary exchange, which usually involves government creating for someone a special privilege.

All the aforementioned suggests that the 99% owe a lot to the 1%. Harry Binswanger, in fact, runs with this idea and, in the spirit of Jonathan Swift, makes a modest proposal–that the 99% should give back to the 1%!

Anyone who earns a million dollars or more should be exempt from all income taxes. Yes, it’s too little. And the real issue is not financial, but moral. So to augment the tax-exemption, in an annual public ceremony, the year’s top earner should be awarded the Congressional Medal of Honor.

Imagine the effect on our culture, particularly on the young, if the kind of fame and adulation bathing Lady Gaga attached to the more notable achievements of say, Warren Buffett. Or if the moral praise showered on Mother Teresa went to someone like Lloyd Blankfein, who, in guiding Goldman Sachs toward billions in profits, has done infinitely more for mankind. (Since profit is the market value of the product minus the market value of factors used, profit represents the value created.)

We’re not sure that the rich should literally enjoy a zero marginal tax rate, but we do agree that a society that celebrates business success is healthier, and morally superior, to a society that denigrates it. A society that denigrates and demonizes the successful, will not end well. This point was made vividly by the great science-fiction writer Robert Heinlein.

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as “bad luck.”

Are young people today learning to celebrate success, or to resent it? Do they respect rich people for their success, or do they feel instead that the rich owe them something? Adam Carolla, in the following epic rant, suggests that resentment of achievement is on the rise. If he’s right, it does not bode well for the future.

Language Warning: Not appropriate for children. Also, for Campus Crybullies: Trigger Warning.

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Redistribute GPAs? (Revised)

In chapter three of The Road to Freedom, Arthur Brooks points out that many of his students at Syracuse University believed that the government should redistribute wealth from rich to poor. Brooks proposed to the students the following idea. He would “take a quarter of the points earned by the top half of the class and pass them on to the students in the lower half of the class.” Despite their support for wealth redistribution, the students “were in unanimous agreement that this was a stupid idea.” Of course, but what’s the difference between grade-point redistribution and wealth distribution? If redistributing GPAs is wrong, doesn’t it follow that redistributing wealth is also wrong?

Turns out that Brooks is not alone in making this analogy, and many students have taken the opportunity to post amusing Youtube videos in which their fellow students struggle to explain why they support redistribution of wealth but not GPAs.


The GPA analogy must have hit a nerve, because “progressive” students got out their video cameras to make responses. Check out this reply by the young tax experts at something called TYT (The Young Turks) University.


To the best we can discern, the young people in this video make two main points.

First, the top 1% of rich people are not paying their fair share of taxes, as evinced by the fact that Mitt Romney paid only 13% of his income, while middle-class people typically have to pay a higher rate.

We agree that rich people should pay more in taxes than should middle-class or poor people. But the U.S. tax code is already very progressive. The top 1% of earners account for more than one-third of the income-tax revenue, and the top 10% account for more than one-half.

Furthermore, the 13% figure is grossly misleading. As the Young Turks themselves acknowledge, Romney’s tax rate was relatively low because the vast majority of his income was derived from investments, which are taxed at 15%, lower than the rate on “ordinary” income. What the Young Turks probably don’t realize is that there was a time, years ago, in this country when investment income was in fact taxed at a rate similar to that on ordinary income. That policy didn’t work out very well because the tax deterred investment and didn’t do much to generate revenue. As a result, something like a bipartisan consensus formed to tax investment income–dividends and capital gains–at a lower rate.

Nevertheless, it is not true that investors like Romney are taxed at only 15%, and that is because taxing investment income amounts to double taxation. The money that investors use to purchase securities comes from after-tax income. The money that Romney invested was already taxed–as ordinary income–at the time that he first earned it. If he had immediately blown the money he earned on hookers and booze, he would have owed no further tax. That’s because current consumption is taxed only once. But since Romney invested the money instead of spending it, he’s taxed again. Future consumption is taxed more than once, which creates a distortion and an inefficiency. It follows that the efficient tax rate on investment income is (approximately) ZERO, which happens to be the actual rate in Japan. The Young Turks think 15% is too low, but in fact the rate should be near zero!

Future consumption, however, is not just double taxed, it is triple taxed. That’s because, before the corporations get around to paying Romney his dividends, they must first pay the corporate income tax. At 35%, the U.S. has one of the highest corporate income tax rates of any country in the world. The tax accountants, however, usually find enough deductions so that corporations pay on average about 25%. Still, that means that Romney’s dividends were already taxed at 25% before being payed out to him, and then taxed another 15% when he received them. The combined effect of these taxes is 36.25%, and again, this falls on top of the taxes Romney already paid during the year in which he first saved the money.

Maybe the Young Turks should learn something about our tax system before they upload their thoughts about it to youtube.

The second major point the Turks try to make is that competition in the marketplace, unlike competition for school grades, is fundamentally unfair. Indeed, the female Turk argues that “the 1%” are “mostly bankers” who got rich by “cheating” or otherwise doing unspecified things “that society frowns upon,” and so they do not “deserve” the money that they have. The male Turk then uses bribery as a metaphor to describe how the rich got rich. In short, the whole system, according to the Turks, is rigged.

But can this be true? Did Henry Ford get rich by bribery, or by revolutionizing the auto industry? Did Bill Gates get rich by bribery, or by revolutionizing the computer industry? Was Steve Jobs a crooked banker? Look, nobody said life was fair, and we can always dig up examples of people trying to gain unfair advantage by engaging in various shenanigans. The fact remains, however, that our largely (for now) market-oriented system does, for the most part, reward hard work and ingenuity.

We do find it disturbing that young people in particular should argue that the system is rigged and opportunity a mirage. Young people, with the chance before them to shape their entire adult lives, should be optimistically planning and pursuing their dreams, not whining about how the deck is hopelessly stacked against them. For this failure, some of the blame must be assigned to the schools.

Furthermore, even if we accept the Young Turk argument that people are cheating, how does this justify redistribution? For instance, to pursue their own metaphor, suppose that some people were obtaining high grades by resorting to bribery. In that case, would the obvious solution be to redistribute grades by giving extra marks to those who have not earned them, and in the process perhaps also taking marks away from those who did earn them? Or would the proper response be to, you know, put a stop to the bribery?

And which is the economic system that facilitates getting ahead through ‘bribery’ of one sort or another? That would be a socialistic system, where government officials have the power to determine who gets what, where, when, and how. If the Young Turks really want to abolish the role of ‘bribery,’ they should advocate for free markets.

The really interesting thing, however, is that the Turks felt compelled to argue that the rich did not earn their wealth legitimately. Inadvertently, they have effectively conceded the point that wealth earned legitimately should not be redistributed! Since different people have widely varying willingness and abilities to legitimately create wealth, it follows that wide disparities of wealth can exist without justifying distribution, just as wide disparities exist in GPAs. That was indeed the exact point that the GPA analogy was intended to make. As the kids say, “Game over.”

We cannot conclude this post, however, without noting Female Turk’s really jaw-dropping argument that the way the rich “give people opportunities” is by “paying taxes.” Oh, is that where opportunity comes from? Only through government? Gosh, all these years we thought that rich people gave opportunities by starting and expanding businesses and thereby creating jobs, and by developing new products and services that improve our standard of living.

Female Turk–another proud product of modern America’s schools.

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