The unbearable miseries of Democrats

Democrats and the Left have a long and ever-expanding list of concerns: climate change, white supremacy, rising sea levels, non-organic vegetables, insufficient diversity, COVID, systemic racism, population growth, pronouns, Fox News, Donald Trump, and now, Giorgia Meloni, just to name a few.

Conservatives, on the other hand, have relatively few concerns, such as individual freedom, economic growth, law and order, secure borders, sanctity of life, the importance of families, and the U.S. Constitution. These are values conservatives have treasured since at least the founding of our nation.

There are also qualitative differences between the concerns of liberals and conservatives. Unlike those of the Right, the concerns of the Left are negative. Theirs are also without substantive foundations, clear definitions, logic, or evidence. They are unrecognizable exaggerations of reality. Compared to Democrats, conservatives are worry free.

The frequent additions to their long list of anxiety-causing concerns suggest that the Democrat Party suffers from a kind of collective attention deficit disorder. Democrats and the Left occupy a world fraught with peril, a world in which happiness is impossible.

The anxieties of Democrats lead to enormous costs for the rest of the population. Their hysteria regarding fossil fuels is one of countless examples. Their restrictions on drilling, fracking, and the cancellation of pipelines have caused a doubling of natural gas, gasoline, and diesel fuel prices. Partly because natural gas is the main raw material for fertilizer, food prices have also risen substantially.

The supposed threat of climate change is a favorite issue the Left uses to fan the flames of anxiety. It’s an all-purpose specter that has been highly effective in frightening millions, especially children. The Earth’s climate is an extremely complex subject, but Democrats conveniently ignore that fact. They abide by W. C. Fields’ famous dictum, “Never smarten up a chump.”

Similarly, COVID and the accompanying lockdowns typify the Democrats. It is now clear they grossly exaggerated the threat of the virus and abused it for the largest and most destructive power grab in U.S. history. They coerced us all to behave in absurd and repressive ways -- masks, social distancing, untested and dangerous vaccines, and horrible isolation. The fear of COVID resulted in many more deaths than COVID itself. The lockdowns were crimes against humanity. Those responsible should be punished as criminals.

The Democrat Party has until now been adept at exploiting fear wherever it can to increase its power and control. Individual and societal choices are better based on courage than fear. As Helen Keller said, “Life is either a daring adventure or nothing.”

The time is ripe to rid ourselves of the miserable fearmongers.

Image: ◼ Enough Project

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◼ The unbearable miseries of Democrats At American Thinker

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Inequality Myopia

President Obama says that growing inequality is “the defining issue of our time.” Several Democrats have said that inequality will be their primary campaign theme for the 2014 election season.

If the president is correct, and if the inequality strategy spells success for Democrats, it will be because of a total distortion and over simplification of the meaning of inequality.

At least in their rhetoric, Democrats have made equality their number one priority. It has become more an obsession than a policy objective. Mother Jones contributor Kevin Drum writes, “The heart and soul of liberalism is economic egalitarianism.” According to Jon N. Hall, “For progressives, equality is an end in itself, and a higher value than freedom, happiness, or prosperity.”

Furthermore, liberals have a one-dimensional vision of equality. Virtually the only kind of inequality they ever address is income inequality. The human experience, however, is multi-faceted.

If it were possible to create conditions that would result in equal incomes for all Americans, there would still be wide differences in intelligence, athletic ability, health, ambition, and beauty, just to name a few. If we all had equal incomes, we would not all magically feel equal. Equality of incomes does not equal equality, and equality does not equal fairness.

For liberals it is an article of faith that income inequality is increasing in America. They cite statistics indicating as much. Nevertheless, those statistics are themselves over-simplifications. Such statistics usually hide at least as much as they reveal. Economist Walter Williams observes that “Most of what’s said about income inequality is stupid or, at best, ill-informed.”

For the sake of discussion, however, let’s grant that income inequality is increasing. One of several changes offsetting much of that kind of inequality is a countervailing decrease in consumption inequality.

Historian Victor Davis Hanson, for example, in a column titled “Every Man a King” notes that “Three-bedroom, two bath suburban houses of the 21st century are warmer in winter, cooler in summer, and with far more appliances and comforts than the vast mansions of the rich of the mid-20th century. In sum, Americans are richer, healthier, and have more options than at any time in their history — and in ways that do not register in our outdated metrics of what constitutes being wealthy or poor.”

Virtually every American who wants one has a smart phone. Smart phones open a vast array of alternatives to everyone who has one, especially access to information, an extremely important resource. That universe of choices is essentially the same for everyone regardless of income.

What’s true of smart phones is true to some degree with a large number of other consumer products that have generally increased in quality, variety, and decreased in price. Joseph Schumpeter pointed out that affordable, low-priced washing machines benefit low-income persons far more than upper-income persons.

In regard to impact, consumption is clearly more important than income. Consumption is closer to the ultimate objective — human comfort and satisfaction. Increasing consumption equality deserves a greater weight than decreasing income equality.

Another especially important non-income dimension of inequality is what’s been happening to life expectancies. In an paper titled “Mortality Inequality,” University of Chicago economist Sam Peltzman points out that “The typical income inequality measure leaves out an important dimension: the length of time over which an income or consumption stream is enjoyed.” Rather than focusing only on income inequality, Peltzman uses the term “social inequality.” He found that “Unequal longevity was once a major source of social inequality, perhaps even more important than income inequality, for a long time. But over the last century, this inequality has declined drastically in high-income countries and is now comparatively trivial.”

Life expectancy for Americans born in 1900 was 47 years. It is now 78 years. How much is living an extra 31 years worth? Longevity has increased far more than at any previous time in history, and there is much less inequality of longevity.

According to Peltzman, “The largest contributor to this narrowed gap — and thereby to reduced mortality inequality — has been dramatically reduced infant and early childhood mortality.”

The probability that an infant born in a developed country today will survive to his or her fifth birthday exceeds .99. This is in sharp contrast with much of human history. For example, in the mid-19th century, 23 of every 100 U.S. infants born did not reach their first birthday. Another seven would die before reaching age five.

In other words, 160 years ago, 30 percent of newborns did not live past age five! There is probably no greater source of heartbreak and tragedy than the death of a child. The dramatic reduction of that event is an incalculable social benefit.

Peltzman also points out that, “Even in less developed countries, like Brazil or India, mortality is more evenly distributed today than income is distributed in an advanced welfare state. Inequality of lifetimes is well along in a historical transformation from a major source of social inequality into a minor one.”

The generally accepted summary statistic for inequality is the “Gini Coefficient.” For “lifetime inequality” the Gini Coefficient for the U.S. has dropped from roughly 50 in 1850 to about twelve in 2010. Proportional declines have occurred worldwide. In other words, the degree of mortality inequality is less than one quarter what it was 160 years ago. It would be hard to exaggerate the significance of that change.

Anyone who makes sweeping statements about increasing inequality is being deliberately blind to such enormously important countervailing factors. A longer lifespan correlates more closely with human happiness than higher incomes. Which would you rather have — a 40 percent increase in your income, or a 40 percent increase in your life expectancy? It’s not a close call.

Democrats and the left focus virtually all their attention and concern on inequality in America, not global inequality. If they expanded their focus, it would do further damage to their claim that inequality is increasing.

A World Bank report issued last year concluded that “Extreme poverty in the world has decreased considerably in the past three decades. In 1981, more than half of the citizens in the developing world lived on less than $1.25 a day. This rate has dropped dramatically to 21 percent in 2010.… Extreme poverty headcount rates have fallen in every developing region in the last three decades. And both Sub-Saharan Africa and Latin America and the Caribbean seem to have turned a corner entering the new millennium.”

Decreasing global poverty is at least partially the result of “globalization,” although you will rarely hear about any positive aspects of globalization from the left.

Exaggerating and over-emphasizing negative news while ignoring positive news is not a harmless endeavor. The Bill and Melinda Gates Foundation just released “The 2014 Gates Annual Letter.” They title it “3 Myths That Block Progress for the Poor.” Here is how they summarize their letter:

By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and are I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful. That’s why in this year’s letter we take apart some of the myths that slow down the work. The next time you hear these myths, we hope you will do the same.

That’s excellent advice. I wonder, however, if the Gates have asked themselves why there are so many people who think the world is getting worse? It’s in large part because creating the myth serves the purposes of liberal politicians.

Inequality is not totally a myth, but everyone is not equally concerned about it. The degree of concern is primarily a function of envy and resentment. Those are widespread and powerful human emotions. Demagogues throughout history have played on those emotions to gain power and achieve their objectives.

However, envy has never been considered a virtue and has been strongly condemned for thousands of years. It is one of the Seven Deadly Sins. The Tenth Commandment is “Thou shalt not covet.” Saint Thomas Aquinas described envy as “sorrow for another’s good.” In Dante’s Purgatory, the punishment for the envious was to have their eyes sewn shut with wire “for having gained sinful pleasure for seeing others brought low.”

In a number of speeches President Obama has referred to “millionaires and billionaires,” with contempt and resentment practically dripping from those words. The resentment toward “the one percent” is driven primarily by envy rather than actually wanting to do something for the poor. Envy is not a sound foundation for public policy. The left apparently is bothered more by the existence of rich people than by the existence of poor people. They subscribe to the absurd belief that wealth causes poverty.

The “War on Poverty” recently marked its 50th anniversary. It is more than coincidental that since 1965 the number of babies born to unmarried mothers has increased from 3.1 percent to 40.7 percent. The welfare state reduces the disincentive for having children outside marriage. Basic economics tells us that when you reduce the price of something, you’ll see more of it.

In a column titled “How to Fight Income Inequality: Get Married,” Ari Fleisher pointed out that “In families headed by married couples, the poverty level in 2012 was just 7.5%; those with a single mother: 33.9%.” Insofar as income inequality has increased over the past half century, a large portion of it could be explained by the increase in single motherhood.

When it comes to addressing the issue, Democrat policies increase the amount of inequality rather than reduce it. Inequality is a problem liberals would rather hype than solve.

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◼ Inequality Myopia February 6, 2014

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Speculators and Manipulators

Other than killing Osama bin Laden, President Obama seems incapable of taking responsibility for anything. Blaming speculators is the latest iteration in his ongoing crusade to escape responsibility and to change the subject. He has added speculators to a long list that includes George Bush, insurance companies, greedy physicians, big oil companies, “fair share” fugitives, and Republicans in Congress. He should change his name to Barack Oblama.

Obama’s specific charge is that speculators are the reason for rising gasoline prices. Robert Reich, who for some unknown reason claims to be an economist, says that “speculation by U.S. index fund traders has been raising prices by up to $1 per gallon.”

Speculation can mean many things and take many forms. Basically, it is the attempt to profit from price changes.

Confusion about the role and impact of speculation has been common and recurring throughout history. Take, for example, the accusation that speculators artificially increase the price of the commodity in question.

It’s true, of course, that speculators can contribute to an increase in the market price of something by adding to the demand for it. What’s important to keep in mind, however, is that’s only half the picture. A speculator cannot make a profit by simply buying something. There’s no profit in hoarding. There has to be a round trip of both buying and selling. The main objective is to buy at one price, and then to sell at a higher price.

The impact of buying pushes prices up, the impact of selling pushes prices down. There is absolutely no reason to assume that speculators permanently increase the price of anything.

Speculation can benefit the economy in a number of ways, one of which is to allocate resources between time periods. An economy, like everything else, exists in time and space. The value and usefulness of something can be increased by changing the time and/or location it’s made available to users.

The supply of no commodity is constant over time. Prices tend to be low when supply is abundant and high when it’s not. The supply of corn is highest right after harvest time. If all of that corn were dumped on the market at the same time the price would be extremely low. The incentive to use it efficiently would be weak. Months later we could expect a shortage of corn and the price would spike. Speculators anticipate this dynamic. They buy when the supply is abundant and the price low, pushing up the price, and sell when the supply is low, pushing down the price. The net result is that both market prices and available supply are moderated.

Speculators, as such, are not philanthropists. They don’t wake up in the morning asking themselves, “How can I benefit humanity by stabilizing prices and supply over time?” Their actions are motivated by self-interest and profits. In the words of Adam Smith, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” The societal and economic value of speculators is not as obvious as for butchers, brewers, and bakers, but it can be every bit as real.

The information and incentives provided by the price system are crucial to the efficiency of how and when resources are employed. Speculation helps short-term prices conform to long-term realities. The economy functions best when we don’t allow temporary abundance to give false signals about what will be true in the long run.

Speculation is one of the factors that lead to what economists call “price efficiency,” meaning prices that reflect all available information. Such information includes expectations about future conditions. For example, if a stock’s price is expected to be higher tomorrow, it will be higher today.

Speculators assume the risk other economic players would rather avoid. A farmer can sell his crop even before he plants it. The farmer essentially transfers the risk (uncertainty) of price fluctuations to someone else. He can focus his efforts on farming and not worry about the vicissitudes of the market.

Speculators usually face intense competition with other speculators. The current price will be bid up until the anticipated profit is roughly equal to the average of other investment alternatives. At a minimum, the expected price change has to cover the costs of storage if they are to make a profit. Furthermore, speculators are not assured a profit. When their predictions are wrong, they lose.

Blaming speculation for high prices reflects the rawest kind of economic ignorance. I couldn’t begin to count the number of times I have been stunned by the utter lack of economic understanding demonstrated by Barack Obama.

Obama and his ilk are willingly and deliberately ignorant of economics and economic realities. Economics is an annoying impediment to their utopian belief system and their political objectives. Obama doesn’t understand how a market economy works, and doesn’t want to know. If he could he would criminalize the free market. He is as clueless as the worst economics student I ever taught, even at the beginning of the class. Obama never lets ignorance slow him down and we all suffer as a result.

Regulations against market “manipulation” already exist and are enforced by the Commodity Futures Trading Commission. President Obama has recommended increasing fines tenfold to a maximum of $10 million per violation, as well as more enforcement funding for the CFTC. According to the Wall Street Journal, “In the past 35 years, the CFTC has brought dozens of cases of manipulation in energy markets. It was successful in proving only one in court.” Besides prohibitions on manipulation, the regulations also prohibit “recklessness” and the creation of prices that are “artificial” (in contrast to being determined by supply and demand). The CFTC has the all but impossible task of proving that one firm has the ability to affect prices on the multi-billion-dollar commodities markets. No wonder the agency has such an atrocious track record.

More regulations and more bureaucracy will not stop imaginary problems that are impossible to define or enforce. They may help Barack Obama distract attention from his disastrous first term, but otherwise they are a counterproductive waste of time and resources.

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◼ Speculators and Manipulators May 3, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Don't Blame Reagan

Today's California seems to hate the private sector. And vice versa.

◼ Don't Blame Reagan - Ron Ross/North Coast Journal

We can all agree that California is a fiscal mess. As I have traveled around the country over the past few months, people I talk with seem to essentially view our state with a sense of pity. They ask, "What are you guys going to do out there?"

The fact that this state, with all its natural beauty, delightful climate and creative population, has gotten itself into such dire straits raises the obvious question -- why? How, exactly, did this come to pass?

Two Bay Guardian journalists, Steven Jones and Tim Redmond, present the rather implausible hypothesis that the true sources of our problems are rooted in the long-ago administration of Ronald Reagan and the free market philosophy that he espoused. More specifically, they blame the 1978 passage of Proposition 13, which limited property tax increases in the state. Attributing our problems to Prop 13 is an argument I've seen presented many times over the past few years.

Jones and Redmond assert that "opposition to taxes is now deeply embedded in the California electorate." Their lament, essentially, is that we are in this predicament because taxes aren't high enough. Granted, primarily because of Prop 13, California's property tax rate is below the national average. That, however, is only part of the picture.

California has the highest state income tax rates and the highest sales tax rates in the nation. We are first out of 50 in those rather dubious achievements. (Our top income tax rate, 10.55 percent, is almost twice the average of the other 49 states.) I shudder to think how high our tax rates would be if the electorate were not under the spells of Ronald Reagan, Howard Jarvis (described by the authors as "a Republican landlord lobbyist") and Milton Friedman. In spite of Prop 13, state government expenditures have increased more than 7 percent per year since its passage.

Jones and Redmond seem to believe that advocacy of free market economics and opposition to government growth started in California 40 years ago. They also believe that California is such a trendsetter that the philosophy contaminated the rest of the country, and the whole world as well.

Argument for the benefits of free market economics has been around for well over 200 years and was first elaborated by a Scotsman, Adam Smith, with the publication of "The Wealth of Nations" in 1776. The most famous tax revolt, the Boston Tea Party, occurred in 1773.

It apparently doesn't occur to the authors that the kinds of liberal and progressive policies they advocate might have played in California's decline. Because they refuse to look inward or take any accountability, they can only conjure up strained explanations as to why someone else must be to blame. All the state's problems are caused by the ghosts of three dead white guys (Reagan, Jarvis and Friedman).

California's fundamental problem is its anemic economic growth rate. Our state has the fourth highest unemployment rate (12.2 percent) and the second highest home foreclosure rate. Is California in such relatively bad shape because its citizens are not taxed enough? That doesn't make sense.

The opposite is much closer to the truth. Because of high taxes and irrationally burdensome regulations, California is near the top of the list in regard to hostility toward business. According to a ranking by the Small Business and Entrepreneurship Council, only New Jersey has a more business-unfriendly environment. Californians can, if they choose, burden businesses with ever more demands and regulations. They pay a high price, however. Choices have consequences. Intel Corporation, the chip manufacturer that started in California, announced earlier this year that it would be investing $7 billion in new manufacturing facilities over the next two years -- in Oregon, Arizona and New Mexico. There's a pattern there. Are they avoiding California because our taxes are too low?

Jones and Redmond recognize the negative effects of the kinds of policies they espouse. "Certainly, turning over more public resources to free market capitalists, cutting taxes and slashing government regulation will spur private sector economic growth, just as advocates claim. But that growth has a cost. The wealth won't be shared by everyone." Their argument essentially says there's no point in creating wealth if it's not equally distributed.

In other words, if the beneficial impacts of some policy are not equally shared by everyone, they must be rejected. Such a standard creates an absolutely impossible hurdle for any human action. For Redmond and Jones, income equality is more important than economic growth. I have never understood those kinds of priorities. The damage done by unemployment is a real and unrecoverable loss. Ironically, it also hurts government revenues and, in the end, those citizens who depend on government-funded programs. If Redmond and Jones really want more money flowing into state coffers they should be welcoming policies that encourage economic vitality.

Jones and Redmond regret that corporations don't pay as much taxes as they should, partly because of Prop 13. The fantasy that corporations are capable of paying taxes is one of the most naïve beliefs of the left. In the real world, the world all of us actually live in, only humans are capable of paying taxes. Corporations are only intermediaries. They can write the checks to the IRS or the Franchise Tax Board, but they can't bear the "burden" of taxes any more than cows or real estate can.

Corporations connect with humans in three ways -- owners, employees and customers. The burden of corporate taxes falls on some combination of those three groups. Corporate taxes result in some combination of reduced profits for shareholders, higher prices for customers and lower wages for employees. The actual distribution of the effects varies from industry to industry, case to case. The conclusion of most recent research indicates that the principal burden falls on the employees of corporations. If your objective is to soak the rich, the corporate tax is an extremely crude and counterproductive means for doing so. Many on the left despise corporations and have no interest in actually analyzing their policies, so the corporate tax is one of their favorite weapons of choice.

California will survive and we will muddle through somehow. Unfortunately, we are squandering our vast potential by misreading the fundamental sources of our chronic problems.

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This article originally ran in the North Coast Journal. October 29, 2009