The Worrywart Generation: The Age of Debilitating Anxieties

Apparently a large fraction of America’s creative talent is being used for the creation of imaginary anxieties. These faux phobias are doing great damage to our abilities to live our lives to the fullest.

A partial list of bogus anxieties would include sustainability, GMOs, glutens, pesticides, running out of resources, CO2, fossil fuels, insufficient diversity, climate change, endangered species, landfills, loss of wet lands, carbon footprints, fracking, plastic bags, renewability, sugary soft drinks, and “white privilege.”

President Franklin Roosevelt’s most frequently referenced quote is “Let me assert my firm belief that the only thing we have to fear is fear itself–nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” That is an absolutely profound piece of advice. It was timely when he said it, it is timely now. Roosevelt’s quote raises an important question, why should fear be feared? Why did he say that fear “paralyzes?”

A very wise psychologist friend of mine told me the following, “Fear is the ultimate issue, the controlling factor. If you overcome your fear you’re liberated. People who don’t overcome their fears have lives that get smaller and smaller. The goal is to avoid being controlled by fear.” That, he says, is the most important lesson he’s learned after counseling hundreds of clients over his forty plus years of practice. Our societal exaggeration of dubious fears is causing too many lives to get “smaller and smaller.”

There are good reasons why society admires courage and despises cowardice.

Fear is one of the primary subjects taught in primary and secondary schools both public and private. Teaching fear to young people is a kind of collective child abuse. We are raising a generation of paranoid neurotics. Our children are being taught, erroneously, that individuals and the environment are delicate and fragile.

A huge irony of the explosion of anxieties is that it’s occurring at a time when living has never been safer or risks been fewer. Average life expectancies are almost two-thirds longer than they were just 100 years ago. Humans have never been safer yet there is more fear and anxiety than ever before. It’s as though when legitimate risks diminish, humans have to invent new ones to replace them.

The popular energy bar company Kind has as its motto: “Do the Kind Thing—for your body, your taste buds, & the world.” The company claims that its products are “economically sustainable and socially impactful.” The following list appears on its energy bar wrappers:

• All natural/non GMO • Gluten-free • Low Glycemic • 6g protein • Good source of fiber • Very low sodium • Dairy-free • Cholesterol-free • No sugar alcohols • Ingredients you can see and pronounce • 0g trans fat

What a long list of things to worry about just for eating a candy bar! Maybe they should just say, “Eat this candy bar and you will never die and you will save the world.” By implication, traditional candy bars are nothing more than slow poison.

There’s a lot more we don’t know about diet and nutrition than we do know. For example, nutritionists have recently admitted they have been wrong about the degree of harm resulting from consuming salt, cholesterol, coffee, and fats. If you were avoiding those things, think of the fun you missed!

Those who are the most paranoid seem to know the least about the objects of their anxieties. For example, fear of genetically modified foods, glutens, and hydraulic fracturing are based almost solely on complete ignorance of these issues and gross exaggerations of the actual dangers.

Fear is the primary impetus behind the population explosion of regulations over the past several decades. It is now estimated that regulations cost the U.S. economy $1.9 trillion a year, an amount equal to about ten percent of our GDP. It is a rare regulation that does more good than harm.

A particularly insidious and widespread form of fear mongering is political correctness or PC. PC is essentially fear of words. PC stifles communication and corrupts human interaction.

The latest variation of political correctness are the so-called “trigger warnings” that are the rage on college campuses. These have been appropriately labeled by Theodore Dalrymple as “pre-traumatic stress disorder.”

Too many people are squandering their one and only chance at life worrying about imaginary anxieties that, even if true, they can do nothing about.

In regard to the environment, humans are far less important than the worriers think they are. That’s particularly true of individual humans. In the big scheme of things it’s not going to make an iota’s difference whether or not you recycle, drive a Prius, or use reusable shopping bags. If you think it does you’re kidding yourself and wasting your money, time, and brain capacity. The environment “will little note or long remember” your miniscule efforts. Relax, already!

The squandering of our one chance to live life is not, of course, a recently invented habit. Omar Khayyam was a twelfth-century poet. His immortal poem the Rubaiyat offers the following ageless wisdom:

Before the phantom of False morning died Methought a Voice within the Tavern cried, “When all the Temple is prepared within, Why nods the drowsy Worshipper outside?”…

Come, fill the cup, and in the fire of Spring Your Winter-garment of Repentance fling: The Bird of Time has but a little way To flutter—and the Bird is on the Wing.…

Oh, threats of Hell and Hopes of Paradise! One thing at least is certain — This Life flies; One thing is certain and the rest is Lies; The flower that once has blown forever dies.

The title of Hank Williams last recorded song put it more colloquially: “You’ll Never Get Out of This World Alive.”

You only get one chance at life. Don’t squander it fretting about things beyond your control or understanding. Love and be kind to those near you. Do your job well. Those are the ways you can actually “make a difference.”

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◼ The Worrywart Generation: The Age of Debilitating Anxieties June 11, 2015

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.

California Gasoline Prices: The Damage Done

Currently the average price of regular gasoline in California is $3.81 per gallon. That is $1.11 above the national average ($2.70). What are the reasons for this 40 percent higher price? There’s a witch’s brew of factors, but in a nutshell it boils down to the fact that California’s Democrat politicians have taken on the responsibility of saving the planet. That, of course, is a quixotic endeavor. Californians are wasting billions of dollars and getting nothing in return.

Individually California consumers spend about sixteen dollars more than necessary each time they fill their gas tanks or about $600 a year on average. Collectively California consumers purchase 14 billion gallons of gasoline each year. In other words, we’re spending $15 billion a year more than what we would if gasoline prices equaled the national average. The benefit-cost ratio of those expenditures is as close to zero as you can get.

Fuel costs are a major budget item for many California businesses. High gasoline and diesel prices have impacts beyond what can be seen at the pump.

One big contributor to the price difference is the “special formulation” for gasoline in California. Think of it as special gasoline for a special state. The formulation is the brainchild of the California Air Resources Board, possibly the most powerful and destructive bureaucracy ever created by a single state.

The special formulation supposedly creates less air pollution than gasoline sold in the other 49 states. Unfortunately, there are only a small number of refineries capable of producing the special formulation. That fact leads to other costly problems. The small number of refineries restricts supply and reduces competitive pressure resulting in higher prices. Whenever a refinery is out of commission prices spike. That happens on a fairly regular basis.

Another culprit in California’s elevated gasoline price is the “California Carbon Tax Law of 2014.” The tax took effect at the beginning of 2015. It mandates that petroleum suppliers buy “pollution permits” for the greenhouse gases generated by the fuel they deliver. At this point, how this complicated law is actually going to play out and how the revenue is to be used is anyone’s guess. At the present time a permit for producing a ton of CO2 is roughly $12.

The law “finds and declares” that “Global warming poses a serious threat to the economic well-being, public health, natural resources, and environment of California. The adverse impacts of global warming include the exacerbation of air quality problems, drought, fires, and an increase in the incidences of infectious diseases, asthma, and other human health problems.” We’re doomed!

The authors of the law could not resist the opportunity for patting themselves on the back: “California has long been a national and international leader on energy conservation efforts through energy efficiency requirements, renewable energy standards, natural resource conservation, and greenhouse gas emission standards for passenger vehicles.” Californians are so lucky to have such wonderful politicians watching out for their well-being.

Will not higher gasoline prices disproportionately impact low income earners? Not to worry. They thought about that already: “It is the intent of the Legislature that revenues collected under this part be rebated to taxpayers, particularly low- and medium-income taxpayers, of other taxes imposed under this code. In that regard, implementation of the carbon tax is intended to be revenue neutral.” Isn’t that clever? Devilish details yet to be determined.

Politicians and environmentalists do not consider high fuel prices to even be a problem. In fact, they applaud them. The state’s Carbon Tax Law is deliberately designed to increase the price of gasoline and diesel fuel for California consumers. The law states, “The prices of fossil fuels in California’s energy markets do not reflect the true cost to society of the combustion of hydrocarbon fuels and the release of carbon dioxide into the environment.” Once again politicians have declared that the price system isn’t working properly and it’s their job to put that right.

Although not unique to California, fuel prices are also made unnecessarily high because of the federal “Renewable Fuels Standard.” That’s the widely criticized law that mandates blending ethanol with gasoline. California’s enthusiasm for that law is above and beyond that of most other states.

The RFS adds insult to injury because ethanol has only about two-thirds as much energy per gallon as compared to gasoline. Consequently, E10 (ten percent ethanol) results in “3 to 4 percent fewer miles per gallon” than with pure gasoline according to Fueleconomy.gov.

Retailers in most states give consumers a choice between straight gasoline and E10. In California you are prohibited from using straight gasoline on streets and highways. Since ethanol does damage to small engines (lawnmowers and chain saws, for example) Californians have been graciously allowed to purchase straight gasoline. Relatively few dealers exist, however, and the price is significantly higher (currently $5.46 per gallon at one local dealer) than for E10. Dealers are heavily fined if they get caught putting pure gasoline into automobiles.

The Renewable Fuels Standard not only increases the price of fuel, it also does additional damage by raising food prices. Because of the ethanol mandates, 40 percent of the nation’s corn production goes to fuel not food. Everyone in the country, not just Californians, is paying more for food because of the RFS.

Still another contributor to the unusually high gasoline prices in the state is the above average gasoline tax. Nationally the average gasoline tax is $.49. The California tax is $.69 per gallon for gasoline and $.79 per gallon for diesel. Are streets and highways better in California than other states? Not noticeably.

Complaints about California’s high gasoline prices are surprisingly rare. Why more Californians don’t complain about how they’re getting soaked by the state’s politicians is a mystery. Maybe this summer as many of them drive through other states on their vacations, more of them will become aware of the totally unnecessary damage being done to their budgets. Maybe they will start screaming and hollering. They certainly have reason to.

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◼ California Gasoline Prices: The Damage Done May 21, 2015

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.

The Costly Lie Called the Corporate Income Tax

You now know, or will soon know, what your individual (or joint) tax liability was for last year. However, you’re paying considerably more income taxes than you probably realize. How much more? That’s impossible to say, and that is a major flaw in our tax system. What you don’t know can hurt you and, in fact, is hurting us all in numerous ways.

The revenue collected for 2014 from federal personal income taxes will be roughly $1.4 trillion. The federal corporate income tax will generate an estimated $.32 trillion for the same period. Politicians would like for to believe that corporations bear the burden of that tax.

Economists, however, absolutely agree on one thing regarding corporate taxes—corporations don’t pay them. Corporations write the checks, but that means next to nothing. The tax in no way allows humans to avoid taxes any more than taxing cows would. In this context, corporations are really nothing more than the treasury’s collection agency. The corporate income tax is a public policy lie, pure and simple.

Corporate taxes are paid by some combination of three groups—shareholders in the form of lower returns, customers in the form of higher-priced products (a kind of “value-added tax”), or employees and other input suppliers in the form of reduced wages and prices. The distribution of the tax burden among these groups depends on numerous variables such as competition, elasticity of supply, and elasticity of demand. A study by William C. Randolph of the Congressional Budget Office estimated that “Domestic labor bears slightly more than 70 percent of burden of the corporate income tax.”

We have no idea if the corporate tax burden is progressive, regressive, or proportional. The corporate tax is by far the most opaque of all major tax categories. It is both a stealth tax and, essentially, a random tax. It is public policy flying blind.

The fundamental point is that humans, not corporations, are the ones who experience reductions in their real incomes because of the money collected from what we call the corporate income tax.

This duplicitous tax allows politicians to play the game Milton Friedman described as, “Don’t tax me, don’t tax thee, tax that fellow behind the tree.” The corporate income tax is the world’s biggest tree. The sad reality, however, is there’s no one behind that tree.

We know that for the federal personal income tax the top one percent of taxpayers pay 36 percent of individual income taxes. We haven’t the earthliest idea what the allocation among income groups is for the corporate tax.

The very thing that makes the corporate income tax bad for the economy and bad for rational policy making is the thing that makes it so attractive to politicians. The corporate tax is a demagogue’s Disneyland. As Jonathan Gruber revealed in regard to the passage of Obamacare, in the political world, lack of transparency can be a tremendous advantage. Politicians generally do not like transparency. They’re as afraid of sunlight as vampires are.

Not only do we not know who’s paying corporate income taxes, we also do not know what those taxes are costing the economy. You can be certain that they are costing a lot more than the $.32 trillion received by the treasury.

For the federal government to collect a billion dollars in taxes, it’s not a simple matter of transferring that amount from a checking account in the private sector to a government checking account. “Compliance costs” are a big part of the problem.

A 2013 study by the Mercatus Center at George Mason University found that “Americans face up to $1 trillion annually in hidden tax-compliance costs.” These costs include the fact that “Americans spent more than 6 billion hours (2011) complying with the tax code. This represents an annual workforce of 3.4 million — a population that could be the third largest city in the United States… and larger than the population of 21 states.” The deadweight cost to the economy is equal to over half of the amount collected by the Treasury.

The subjective burden of those billions of hours is multiplied by the fact that virtually everyone positively hates the time they’re forced to spend filing taxes. It is essentially a form of involuntary servitude.

Recently Bloomberg News reported that U.S. corporations are keeping $2.1 trillion of profits overseas. Bloomberg reviewed the securities filings of 304 corporations having both domestic and foreign operations. There isn’t just one reason for doing this, but by far the most obvious is that repatriating those profits would subject the corporations to the U.S. corporate income tax rate of 35 percent.

How much damage is done to the U.S. economy because that enormous amount of money is out of reach? What would be the impact on the U.S. economy if those two trillion dollars were brought to the U.S.? It’s impossible to say with any precision, but it’s reasonable to assume that it would be significantly stimulative.

When profits are sequestered overseas the U.S. treasury doesn’t get a dime of revenue. Our 35 percent corporate income tax generates zero percent revenue on those profits. The world’s highest corporate tax rate generates no tax revenue on that money but it does significant damage to the economy.

If the corporate income tax were repealed entirely, if the $.32 trillion were left in the private economy, what would happen then? There would be more investment and more consumption. More investment would mean more economic growth, more demand for workers. Rising demand for workers would put upward pressure on wages and salaries. More employment and higher incomes means more individual income tax revenue. More investment would increase the capital-labor ratio which would increase labor productivity which would eventually translate to higher wages. Any tax on income is essentially a tax on production. Whenever you tax something you always get less of it.

When investment returns increase, share prices increase. In other words, not only would incomes rise, so too would wealth. Anyone with a 401(k), for example, would see a significant increase in his or her account value.

A 2013 study by the Tax Foundation titled “Growth Dividend from a Lower Corporate Tax Rate” concluded that “When the full economic effects of cutting the corporate income tax rate are taken into account, the federal treasury would collect more in total revenue than it would lose from a lower rate.” The corporate income tax is doing serious damage to the economy and all its participants and it isn’t even benefiting the Treasury (to say nothing to all the state treasuries). We are shooting ourselves in the foot and getting nothing for it.

The Tax Foundation’s study conclusions were opposite to what Congress’s Joint Committee on Taxation (JCT) concluded in a similar report. The contrary conclusions resulted from a simple difference — the JCT used static analysis in making predictions, the Tax Foundation used dynamic analysis. The JCT, in other words, made the absurd assumption that cutting the corporate income tax rate would have zero stimulative impact on the economy. That long-standing methodology used by the JCT has been repeatedly condemned by the Wall Street Journal, among countless others. Requiring the JCT to switch to dynamic analysis in its reports would have profound implications.

The damage done to the U.S. economy by our high corporate income tax rates is magnified by how it compares to the rates in other countries. When state corporate income taxes are included the top rate in the U.S. is 39.1 percent. Only Chad and the United Arab Emirates have higher rates. According to the Tax Foundation, the worldwide average top rate is 22.6 percent. Also, according to the Foundation, “Every region in the world has seen a decline in their average corporate tax rate in the past decade.” The U.S. is suffering from a large and growing disadvantage relative to the rest of the world. Reducing our corporate income tax rates would be beneficial, but only total elimination would allow the avoidance of the enormous compliance costs of the tax.

The fact that most other countries in the world have cut their corporate tax rates shows that it can be done. Other countries have the same kinds of charlatan politicians we have here, but they’ve somehow managed to take steps in the right direction.

If we were ever to eliminate corporate income taxes, one of the greatest benefits would be a major increase in the honesty quotient of our tax system. Wouldn’t it be nice if, for once, we stopped lying to ourselves?

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◼ The Costly Lie Called the Corporate Income Tax April 10, 2015

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.

California’s Object Lessons for Democrats

If Democrats wanted to know some of the reasons they got skunked in the recent elections they could learn a lot by looking at what’s going on in California. The state of California is a distillation of fundamental flaws that are “hollowing out” the Democratic Party.

The politicians, activists, and contributors holding sway in the Democratic Party are far out of step with average voters. A majority of voters either don’t want or don’t care about the favorite issues of the party elites — climate change, Obamacare, fracking, plastic bags, diversity, sugary soft drinks, GMOs, “corporate personhood,” amnesty, late-term abortions and the Washington Redskin’s nickname. Democrats for some reason put a lot of energy into proposals that very few people care about and will have no measurable impact.

For example, a tax on sugary soft drinks was a ballot measure in San Francisco and Berkeley. The Berkeley measured passed, the San Francisco measure did not. Because of differences in how they were structured, the Berkeley measure needed only a majority, the one in SF needed two-thirds, but garnered only 55 percent of the vote. As noted by the San Francisco Chronicle, “San Francisco, always a city that loves being first, instead became the 31st municipality to opt not to adopt a soda tax.”

The tax in Oakland will be one cent per ounce on soda, Snapple, Gatorade, vanilla lattes and other beverages with added sugar. The unsuccessful SF measure would have imposed a two cent per ounce tax on sugary drinks.

According to the Chronicle, “Neighborhoods with more low-income and minority voters, including Chinatown, Bayview, Hunters Point and Visitacion Vallley, voted against the tax.” The fact that the tax on sugary soft drinks in San Francisco failed to pass because lower income neighborhoods voted against it illustrates the Democratic Party elites are at odds with the very groups they claim to care about.

Former New York City mayor Michael Bloomberg, a well-known true believer in the evils of sugar, contributed $657,000 to the Berkeley campaign but nothing for the one in SF. A Chronicle article on the Berkeley measure was headlined, “Town that barely sips it taxes soda.”

“The tax is expected to raise between $1 million and $2 million annually for school gardens, cooking classes for kids, and other public health programs.… But the hope, ultimately, is that Measure D will generate zero dollars because people will stop drinking soda, said Martin Bourque, director of the Ecology Center and spokesman for the Yes on D campaign.” If that happens does it mean the end for school gardens and cooking classes for kids?

Other examples of Democratic political hallucinations were ballot measures in Mendocino and Humboldt counties. Voters in Mendocino County passed a prohibition on fracking even though there are no oil or gas wells in the county and none planned, so far as anyone knows.

In Santa Barbara County a ballot measure to ban fracking received only 38 percent of the vote. Oil and gas wells do exist in Santa Barbara County. Opponents of the measure there successfully convinced voters that the fracking ban would destroy jobs and increase unemployment.

In Humboldt County a ballot measure passed that prohibits growing genetically modified crops, even though there are almost no commercial crops there that would be affected. The county is mostly forested (ninety percent of the world’s redwoods grow there). Dairy and beef cattle are about the only significant forms of agriculture other than weekly farmers’ markets. Just how the ban would be enforced is unclear.

In September Governor Jerry Brown signed into law a ban on “single use” plastic bags. He said at the time, “This bill is a step in the right direction — it reduces the torrent of plastic bags polluting our beaches, parks and even the vast ocean itself.… We’re the first to ban these bags, and we won’t be the last.” Grocery chains and pharmacies will be required to charge customers ten cents for paper bags. One exclusion from the charge will be customers using California’s “CalFresh” program (the trendy new name for California’s food stamp program). Democrats are always looking for a fresh way to help the downtrodden.

Claiming that there is “a torrent of plastic bags” is of course a gross exaggeration/bold-faced lie. A 2011 extensive study and analysis by the British Environmental Agency, “Life Cycle Assessment of Supermarket Carrier Bags,” concluded that plastic bags were, in fact, less environmentally impactful than either paper bags or reusable cotton bags.

Brown’s claim, “We’re the first to ban these bags, and we won’t be the last,” is a classic example of California inflated sense of self. The arrogance and self-importance of California progressives is almost beyond comprehension, akin to the recently discovered videos of Obamacare architect Jonathan Gruber. California politicians labor under the delusion that the whole world is just watching the state in order to know what to do next.

The dime charge for paper bags and the penny per ounce tax on sugary soft drinks are both examples of the how easy Democrats think it is to achieve their desired behavior modifications.

Beginning January 1 California drivers will see gasoline prices increase from 12 to 20 cents per gallon, possibly much more. The reason for the increase is that starting then tailpipe emissions from cars and trucks will come under California’s cap-and-trade program. The ostensible purpose for the program is, of course, to reduce greenhouse gases and thereby prevent climate change.

How the revenue generated from the program will be spent is yet to be determined. Governor Brown wants a third of the money to be used to finance his ill-conceived and over-priced high-speed rail from San Francisco to Los Angeles. The fact that California actually thinks it can make a difference in global temperatures is further evidence of the state’s exaggerated self-importance.

California already has the second highest gasoline prices of all the states, second only to New York. At 49 cents per gallon it also has the second highest gasoline tax, two cents per gallon below first place New York. The new carbon tax will put California securely in the top spot.

One sign that even Californians are coming back from the political ozone is Oakland’s mayoral election where challenger Libby Schaaf beat incumbent Jean Quan. As Chronicle columnist Chip Johnson observed, “The differences between Schaaf and her rivals are like night and day: Schaaf takes a practical approach to public policies and project goals. Quan and [Rebecca] Kaplan are idealists whose big dreams quite often don’t come to fruition.” The two mayors who preceded Quan were Jerry Brown and former congressman Ron Dellums.

California is also a case study of the Democrats’ gerontocracy dilemma. Nancy Pelosi and Barbara Boxer are both 74, Jerry Brown 76 (who was just reelected for four more years), and Dianne Feinstein is 81. Former San Leandro Mayor Anthony Santos, a Democrat, recently observed, “There are too many Democrats who are well over 70 and have no idea what it is like to be young — and what the younger people are thinking and what their needs are.”

As a California resident it makes me sad to witness the immense damage done by Democrats and their “progressive” allies. According to the U.S. Census, California last year had a net out-migration of over 49,000 people, the most of any other state. The state has vast human and non-human assets. The climate and scenery are about as good as it gets. It’s too bad that the politicians exploit those attractions by overtaxing and abusing those of us who can’t bear the thought of leaving.

Among the many lessons shown in the recent election is that the rest of the country has chosen a very different path from the one blazed by California’s Democratic politicians. California is now an outlier rather than a trendsetter. That’s a good thing for the country. Following California is about the worst thing the country and the world could do.

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◼ California’s Object Lessons for Democrats November 19, 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.

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.

Media Dereliction

How important is the media? How much damage can result when they don't fulfill their responsibilities? The press is the only private institution the founding fathers included in the Constitution. Obviously they recognized its importance.

If the media had fulfilled its critically important duties, Barack Obama would not have been elected or reelected president. The media is not motivated by professionalism and integrity but rather by fear, prejudice, guilt, and bias.

The mainstream media has a kind of inverted colorblindness. Their form of colorblindness causes them to see nothing but color. More specifically, it means they cannot see anything but a person's skin color.

The foremost beneficiary of their malady is Barack Obama. He is president today because the media and many voters could not see anything but the color of his skin.

They are the polar opposite of Martin Luther King's character-not-skin-color dream. Making race such a huge issue is itself a kind of racism. Overreaction to a problem often does far more damage than the problem itself. The amount of racial guilt in America is way out of proportion with the amount of racism that actually exists.

The media were so taken with the historical significance of "the first black president" that nothing else mattered to them. Obama became the most unexamined presidential candidate in history. We have paid, and will continue to pay a huge price for their blindness.

Just days before Obama was elected in 2008, Tom Brokaw was the guest on the Charlie Rose show. Their conversation included the following exchange:

Rose: I don't know what Barack Obama's world view is.

Brokaw: No, I don't either.

Rose: I don't know where he really sees where China is.

Brokaw: We don't know a lot about Barack Obama and the universe of his thinking about foreign policy.

Rose: I don't really know. And do we know anything about the people who are advising him?

Brokaw: Yeah, it's an interesting question.

Rose: What do we know about the heroes of Barack Obama?

Brokaw: There's a lot about him we don't know.

This admission by two prominent representatives of the media is stunning for at least two reasons. The first stunner is how anyone at their level could be so atrociously derelict in their professional responsibilities. The second is that they were so casual and nonchalant in admitting what they hadn't done. Obviously their attitude was so common among the crowd they run with that they were totally oblivious as to how bad they sounded. They sounded like innocent bystanders watching one of the most disastrous media breakdowns in the history of the country.

Why are so many in and out of the media still in deep denial about how grossly incompetent Obama is? The media is totally invested in the outcome of the Obama presidency. Their identification with his success destroys their objectivity and judgment. They have melded their identities with Obama's and that has resulted in their becoming pathetic sycophants. They got Obama elected and now they have prostituted themselves by covering for his incompetence.

Current events are evaluated by the media not by how they will affect the country, but rather by how they will affect Obama. His importance has been raised above all else. Nothing else matters. That's sick.

Liberals live in fear of anyone thinking they're racists. That fear makes those in the media unable to do their jobs. It paralyzes them. When we have a liberal black president they become frozen in place. Consequently, we no longer have a free press, but rather a paralyzed press.

The Hollywood left was one of the most vocal and vociferous opponents of the Iraq war. They have said almost nothing about Obama's military threats against Syria. When asked about that difference the Hollywood left makes lame excuses such as their organized protests wouldn't have any effect anyway.

According to the Hollywood Reporter, "Another reason some Hollywood progressives have been reticent to speak out against the war in Syria, according to Ed Asner, is fear of being called a racist. 'A lot of people don't want to feel anti-black by being opposed to Obama,' he said." So it's okay to sell out your principles if standing up for them would make you feel uncomfortable? Pathetic.

The race obsession raises the question, why is race so overwhelmingly important to liberals? I've never heard any of them explain why Obama's skin color is so important. Electing a black person as president was supposed to reduce and ameliorate racism. Has it? Why, exactly, did they think it would? When they decided to make their big investment in Obama they apparently did not think through what they were doing.

For whatever reason liberals have intense racial guilt. How do you spell guilt relief? Support and vote for a black candidate for president. It was a get-out-of-guilt-jail-free card.

America is not the most racist nation in the world, but it seems to be the most race-conscious and race-obsessed nation. Is it healthy to make race so monumentally important? Is that how we get past judging a person by the color of his skin?

Barack Obama is the ultimate and most disastrous application of "affirmative action." Just as affirmative action in college admissions results in tragic mismatches for minority students, Obama is a colossal mismatch for the White House.

Affirmative action is institutionalized racism, just as much as Jim Crow laws and South African apartheid were racist. In regard to the amount of damage done there is no measurable difference among these variations of institutionalized racism. The main difference is that affirmative action is clothed in the garb of pious good intentions. Once again, for liberals it's feelings that matter most.

Obama was a liberals' dream come true. Being black, however, was not his most important entry ticket. Liberals haven't the least bit of tolerance for conservative black politicians. They hate black conservatives more than they hate white conservatives, which is another manifestation of their focus on skin color.

If Obama had been a competent, successful president it conceivably would have reduced prejudice against blacks. To have a positive impact you not only need to be black (or female or gay), you also need to be competent. There is an abundance of competent blacks. Barack Obama just doesn't happen to be one of them.

If electing a black as president means that we can't criticize that president, will we ever want to do so again? Not necessarily. If a black conservative is elected president, the liberal media will not be the least reluctant to criticize him or her. In fact, they will do everything in their power to rip him or her apart.

Barack Obama is having a negative, not positive, impact on the U.S. and the world. He has no love lost for the country he leads. That's not good. He wants to see the country he leads decline, not progress. Sad to say, we're stuck with him and his administration for three and a third more years. It's going to be a test for America's fundamental strength. In the meantime don't expect the media to come to our rescue. _____________________

Ron Ross Ph.D. is an economist and author of The Unbeatable Market. He can be reached at rossecon@gmail.com.

The Larger Lessons of the IRS Scandal

The Larger Lessons of the IRS Scandal: Far from being merely a one-time error, the IRS scandal is the result of... http://t.co/hbBwzIPNMl

— American Thinker (@amthinker) June 6, 2013

______________________

One of the truest and most profound observations ever made was Lord Acton's "Power tends to corrupt and absolute power corrupts absolutely." All the scandals now engulfing the Obama administration are applications of Acton's profundity.

From the standpoint of ongoing damage, a danger even greater than corruption is abuse. Power, especially concentrated power, almost inevitably gets abused. If our goal is to avoid or minimize the abuse of power, our challenge is to minimize the concentration of power.

We have basically only two available choices for organizing a society and economy -- socialism or the market. The difference between those two systems is primarily a matter of where power and control will be vested. Will control be centralized or decentralized?

The benefits of organizing an economy and society around a voluntary-exchange market system are numerous. The most obvious is that the market is the most powerful wealth-producing force that ever existed.

Besides the vast difference in terms of wealth creation, a market economy and socialism differ in regard to who has power and whether or not power is concentrated. A voluntary exchange economy is the greatest limiter of concentrated power ever conceived. Socialism concentrates power, the market disperses it.

When you disperse power, you defang it. When you divide power into millions of pieces you remove most of its ability to do major and lasting damage. The greater the concentration of power, the greater the abuse. North Korea, Zimbabwe, and Cuba are extreme examples of that relationship.

Private businesses have strict limitations on their power mainly for two reasons -- (1) they interact with people through voluntary exchange, and (2) they have competitors. The existence of competitors means that their customers have alternatives. When a privately-owned business abuses any of its customers it pays a price in terms of lost sales.

Unlike the government, there is almost nothing that a private company can actually force you to do. You interact with Exxon or Microsoft by way of voluntary exchange. Each of them must entice you away from the many ways you can spend your money by offering something that has value to you. That something has to be competitively priced.

The IRS's abuse of power is aggravated by the characteristics of the power it has. Of all the thousands of government agencies, the IRS is the most intrusive into the lives of the citizenry. Law-abiding citizens are more afraid of the IRS than they are of the FBI.

The Internal Revenue Code is massive, incredibly complex, and incomprehensible. The complexity also opens the door to abuse. One reason most people are afraid of the IRS is that there are so many rules no one can know for sure he's not in violation of at least one. The sheer number of rules and complex definitions opens the door to selective enforcement. The agency's targeting of conservative groups was a case of selective enforcement.

The complexity of the code is also largely to blame for the fact that the agency adds insult to injury by taking not only our money, but also significant chunks of our time. Complexity also makes true enforcement impossible.

The operation of public agencies is qualitatively different from how the private sector operates. Entities in the public sector tend to be organized for the benefit of the employees and not the customers. Tenure, for example, is far more common in the public sector than in private companies. Because of tenure it is almost impossible to fire incompetent public school teachers. That's good for the incompetent teachers, but bad for the students.

Government agencies almost never have to worry about survival, no matter how poorly the agency is doing its job or even if it's a job that still needs doing. No private company's survival is guaranteed, especially over the long run. Private companies must forever fight for survival. Public entities have virtual eternal life.

When you deal with the IRS, the EPA, or your local building-permit bureaucracy, they hold all the cards. Each of these agencies and others like them has you at a distinct disadvantage. They have you at a disadvantage because you have no other options. They have the power to stop you in your tracks -- "my way or the highway." There is only one IRS, only one EPA. Power and control are largely a function of having alternatives. When conservative groups got abused by the IRS, there was no competing agency for them to try.

Obamacare will be an even more obnoxious intrusion into how we live our lives. A sad and dangerous detail of this further concentration of power is that the IRS will be the enforcer of Obamacare. We are about to embark on a substantial increase in the power and control of the IRS. The IRS is currently in the process of hiring an additional 16,000 agents to carry out its new Obamacare duties. The IRS will decide who will receive subsidies.

If Barack Obama achieves his ultimate objective of a "single-payer" health care system, there will be only one health care alternative. Single payer means single choice.

Being able to choose among alternatives is an essential element of freedom. Freedom doesn't mean much if you have only one option.

As a way for humans to interact, a decentralized market economy is vastly superior to the centralized, coercive, one-size-fits-all socialist model. This is true now and will be even truer in the future. The market offers consumers an ever-expanding menu of choices. If anything, the market's superiority is widening.

The popularity of socialism is a bubble. Admittedly it's a bubble with a long life span. Bubbles, however, eventually burst. Usually the demise of bubbles results in painful adjustments. The demise of socialism, however, would be a boon to mankind.

This particular scandal will eventually go away. We can replace individuals at the IRS but the structure will remain. It's the structure, not the individuals that is the problem. The only solution that will actually work in the long run is to stop and eventually reverse the growth of government. ______________________

Ron Ross Ph.D.A is an economist and author of The Unbeatable Market. He can be reached at rossecon@gmail.com.