Basic economic laws should not be thwarted

In the United States of America, the state continues to deploy failed policies that violate basic economic principles to the detriment of the entire society it seeks to control.   This failure can be seen in America’s Welfare State and progressive income tax program. The former subsidizes individual actions and life styles that can contribute to poverty and the later discourages income and wealth generation. Simply put, basic praxeology shows us when you subsidize something you will get more of it. Tax and regulate something you get less of it.

Since the amalgamation of the Revenue Act of 1916 and FDR’s New Deal, (in which the state used taxation, targeted subsidization, and regulation in an attempt to alleviate and or mitigate its definition of poverty among its citizens), the state began to extremely violate the aforementioned basic principles of human behavior.

In FDR’s “First New Deal” (1933–34), many programs were instituted using state subsidies to pay people who did not work and create new regulations for the banking and industrial sector which increased their moral hazard in an attempt to combat the impact and causes of the Great Depression.

FDR’s “Second New Deal” (1935–38) went further and fully institutionalized state involvement in the nation’s personal behavior in an attempt to address the effects of the ongoing economic crisis.  Programs such as Social Security and the Fair Labor Standards Act would change America forever.

The state, in its infinite wisdom, seeing less than satisfactory results from FDR’s New Deal, thirty years later further increased its involvement in Americans’ personal lives with new programs, subsidies, and taxes during LBJ’s Great Society.

Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it. No single piece of legislation, however, is going to suffice.”
– President Lyndon Johnson, 1964 State of the Union Address

Recently, according to the 2014 House Budget Committee Report, The War on Poverty: 50 Years Later the state’s return on investment has been less than satisfactory.  Below are some conclusions from the report showing failure of the state to eliminate poverty by not understanding basic human behavior:

The War on Poverty at a Glance
Despite trillions of dollars in spending, poverty is widespread:
• In 1965, the poverty rate was 17.3 percent. In 2012, it was 15 percent.
• Over the past three years, “deep poverty” has reached its highest level on record.
• About 21.8 percent of children live below the poverty line.1
In can be no surprise the state has failed to eliminate poverty if one understands the basics tenets of human behavior and the fundamental principles of economics.   The state’s policy violates them. Government programs targeted at poverty reduction/elimination encourage more poverty by encouraging a person to continue their current situation of being in poverty — receive payments and subsidies for having lower income, receive payments and subsidies for not working, receive payments and subsidies for having more dependents, receive payments and subsides for not completing high school, receive payments and subsides for not living a healthy lifestyle, etcetera.
The state also discourages work and thus wealth generation with its onerous job killing regulations which make it more costly for employers and entrepreneurs to create jobs and thus new wealth.
Additionally, the progressive tax system reduces the incentive to generate new wealth as its marginal income tax rates and capital gains taxes punish those who generate more earned income and investment generated wealth.
The state could easily rectify the current situation by eliminating all subsidies to individuals and corporations and stop taxing income and wealth.
1. “War on Poverty.” Http://budget.house.gov/uploadedfiles/war_on_poverty.pdf. United States House of Representatives , 3 Mar. 2014. Web. 8 Apr. 2017.

Can anyone dispute these statements?

 Walter E. Williams is a professor of economics at George Mason University and well known liberty loving commentator who has long spoke of the injustice of taxation and links it to state sponsored robbery.  His view can be validated in the following statement.

“Government income redistribution programs produce the same result as theft. In fact, that’s what a thief does; he redistributes income. The difference between government and thievery is mostly a matter of legality.”

Can anyone argue that one does not pay taxes under threat of punishment by the federal government?  Imagine, if you refused to pay the state. At best, you would be fined and at worst, you would be both fined and jailed.

Thomas Sowell, another brilliant economist and liberty loving commentator also spoke of the questionable action by the state when they take the fruits of labor from one hard-working individual and give it to another.  https://i1.wp.com/mccluresmagazine.com/wp-content/uploads/2014/09/thomas-sowell-mcclures-magazine-659x412.jpg

“What do you call it when someone steals someone else’s money secretly? Theft. What do you call it when someone takes someone else’s money openly by force? Robbery. What do you call it when a politician takes someone else’s money in taxes and gives it to someone who is more likely to vote for him? Social Justice”.

Are there any flaws in Williams’ or Sowell’s theses?

War on Poverty has failed

There is a very good article by Arthur Brooks of the American Enterprise Institute titled The dignity deficit: Reclaiming Americans’ sense of purpose.  The piece speaks of the improbable Trump victory and postulates the win came about because of the anger of those citizens left behind economically in America.  This thesis explaining Trump’s win is not unique, many political pundits have offered the same.  However, Brooks extends the story by going back to LBJ’s War on Poverty. Brooks highlights in his article the plight of a poor Kentuckian named Tom Fletcher. Fletcher, despite government assistance (welfare) is never was able to escape poverty.

In 1966, when the War on Poverty programs were finally up and running, the national poverty rate stood at 14.7 percent. By 2014, it stood at 14.8 percent. In other words, the United States had spent trillions of dollars but seen no reduction in the poverty rate.1

There are millions more Tom Fletchers that Twenty trillion dollars of government largess has not helped and they voted in November, 2016.

The solution to poverty is to go back to fundamental economic principles. If you want more of something, then do not tax it. However, this axiom is ignored by statists and we have many Americans being left behind. The solution is simple, stop taxing the fruits of labor (wealth) and you will see more fruit.

The same principle holds true for government regulations that stifle labor and subsequent wealth generation. If you you want less friction on labor which will lead to more wealth creation, stop unnecessary regulation of the actions that generate wealth.

  1. Brooks, Arthur C. “The Dignity Deficit: Reclaiming Americans’ Sense of Purpose.” American Enterprise Institute. Foreign Affairs, 13 Feb. 2017. Web. 09 Mar. 2017.