How to Defeat Liberals

If we listen up, liberals are telling us how they can be defeated. The challenge for conservatives is to listen closely and build our strategies accordingly.

Recently conservatives have been making major strides in the battle for the hearts and minds of voters. Liberalism in its various manifestations — Democrats, global warmists, organized labor, for example — are hemorrhaging support and influence. Conservatives are on the ascendency.

Liberals and Democrats are dispirited and in disarray. They are rapidly losing support and their reactions are making matters even worse for them. By analyzing why this is happening, conservatives can keep them stumbling backwards and be even more effective in the future. The political battle will go on long after the November elections. Why have conservatives been successful, and what can we do to build and continue to gain support?

One of the keys is to remember that in any battle strategy, “intelligence” is crucial. Knowledge of the enemy, his strengths and weaknesses, is often the deciding factor in who prevails. Football teams, for example, expend great effort “scouting” their future opponents. The “game plan” is largely based on what’s in the scouting report.

What, for example, are liberals telling us about themselves? Why, for instance, do they accuse tea partiers and conservatives in general of being racists? Partly it’s because that’s all they’ve got. They are frustrated and out of ammunition. It is a clear indicator of their weakness and lack of sound ideas.

Liberals are telling us what they fear. Let’s give it to them. Let their squirming and discomfort be our guide. When they squeal like stuck pigs, stick them again. It’s not just effective, it’s fun!

For example, one of Rush Limbaugh’s most effective and influential innovations is his use of audio clips and reading quotations of liberals. This is not something that had not been done before, but he definitely has taken the practice to new levels. Rush turns the words of his political opponents against them and demonstrates the absurdity and inconsistency of what they say and believe. He listens carefully to what they say, takes it seriously, logically dissects it, and then shows just how nonsensical it is. This is not what liberals want to happen. They would prefer that no one actually think about the things they say and do.

Rush is a teacher and most of his classroom materials are provided free of charge by his opponents. This is, no doubt, one of the things about Rush that drives them crazy and makes him an object of their hatred. Also driving them crazy is one of Rush’s favorite riffs, “Having more fun than a human being should be allowed to have.”

When Democrats and their enablers say something, our challenge is to step back and decipher what they say. What’s even more important than their intended message is the “meta-message.” The website Enclyo defines meta-message as “A message about a message…Meta-messages are higher level messages about: 1. The type of message being sent. 2. The state/status of the messenger. 3. The state/status of the receiver. 4. The context in which the message is being sent.” We can use an awareness of their meta-messages — that their reactions are signs of weakness, for example — to our advantage.

The U.S. is without doubt a center-right country. Part of the proof of this is that even Democrat candidates try to sound like conservatives when they are in tough election fights. Here in California Jerry Brown’s campaign commercials make it sound like he has joined the tea party. Across the country Democrat candidates are distancing themselves from the liberal policies of the Obama administration. Liberals cannot be open about what their beliefs and policy objectives actually are.

Liberals have to hide the fact that they’re liberals. Why can’t they admit and be open about who they are and what their real objectives are? One reason is their realization that voters are not nearly as socialistic as they are.

Conservatives do not have to hide the fact that they’re conservative. Conservatives are proud to be conservative and need to realize that they are playing in a friendly environment. They have the home-field advantage and do not need to act like underdogs. Too many conservatives seem to have self-esteem issues. Conservatives have ideas that people are buying, liberals don’t.

Liberals have also shown that they can’t stand clarity. They don’t really want to communicate, they want to obfuscate. The latest and somewhat comical example is Obama’s science czar, John Holdren, claiming that the term “global warming” is a “dangerous misnomer.” He wants to replace it with “global climate disruption.” If we can’t figure out ways to exploit that kind of nonsense, we need to be trying harder.

Liberalism is essentially the “muddled-talk express.” Political correctness is about as helpful to communication as a mouthful of marbles. We need to answer their wussy double-talk with clear, muscular words that actually mean something. (The Urban Dictionary defines “wuss” as “characterized by being, feeble, cowardly, and generally no fun.”)

You may have noticed lately that liberal commentators can’t resist offering advice to Republicans. Such advice is not offered in good faith. They are not concerned about the well-being of the Republican Party. Whenever liberals give advice and sympathy, do the opposite. They do not wish us well.

Democrats are scared out of their wits that the Republican Party might stand for something. Democrats love liberal Republicans. They can be even more useful to them than liberal Democrats.

The above are only representative of the universe of opportunities available to conservatives. A political-philosophical war is underway and the stakes couldn’t be higher. Conservatism can win the war, but we will need to employ every advantage we possibly can. And the more fun we have in the process the more likely we are to keep up the intensity. Liberals certainly don’t seem to be having much fun lately.

____________________

◼ How to Defeat Liberals September 24, 2010

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.

Are We ‘Rushing to Extinction’?

The California Academy of Sciences, located in San Francisco’s Golden Gate Park, is one of the finest natural history museums in the country. If you get the opportunity to go there, I urge you to do so. Unfortunately, not everything in the museum deserves to be called “science.”

The following statement is one of the informational posters that’s part of an area called “Climate Change.” It is like other such claims I’ve seen numerous times in similar venues over the past several years. The poster is titled, “Rushing to Extinction,” and has been part of the exhibit for at least two years that I know of.

Today, we are living through the sixth mass extinction of life in Earth’s history. This is due in part to climate change triggered by the carbon dioxide we pump into the air as we burn fossil fuels for energy. The resulting greenhouse gases are altering the biosphere, which is causing the loss of plants and animals around the world. If we don’t change our actions, we could condemn half of all species to extinction in a hundred years. That adds up to almost a million types of plants and animals that could disappear.

I urge you to read the statement again and consider what it says. Although the statement is extreme and sensationalistic, it is not unusual. It is typical of the conventional wisdom. It is ironic that it is found in what is called the California Academy of Sciences. It is reckless fear-mongering propaganda, not science. It cannot be substantiated and is a total distortion of reality.

For example, it is simply not true that “Today, we are living through the sixth mass extinction of life.” About 770 plants and animals have been identified as having gone extinct in the past 800 years. That’s about one per year. We are discovering far more species we did not know about than identifying extinctions.

The poster implies there are a total of two million species now existing. Biologists don’t actually know how many species there are. Educated guesses range between five million and fifty million.

Even if the total number of species is only two million, it means that if half go extinct in the next hundred years, the rate of extinction will have to increase from one each year to 10,000 each year. What’s the probability of such a massive change? How, specifically, is that going to happen?

Previous mass extinctions were the result of asteroids or ice ages. Have we had one of these lately that I didn’t hear about?

Is the statement defensible? It’s a statement made in a certain context, the Academy of Sciences. Apparently it’s an assertion that is supposed to be accepted based on authority. If you’re going to make such a cataclysmic prediction, shouldn’t you provide a little documentation and support? Is it supposes to be self-evident?

To this point “climate change” has not increased the rate of extinction. We definitely are not currently “living through the sixth mass extinction of life.” To say we will in the future is speculation, about which there is much disagreement, to put it mildly. There is definitely no “consensus.”

The poster is worded as if what it says is beyond dispute. The statements are not qualified in any way. I assume the designers of the exhibit intend for it to be taken seriously.

“If we don’t change our actions, we could condemn half of all species of life on earth today to extinction in a hundred years.” You can get away with about any outlandish prediction you want to make if you hide behind the word “could.” In the context of basic scientific protocol, any such statement should be presented in terms of probabilities as well as a discussion of the specific preconditions to such an event.

Judging from the numerous groups of children I see when I go there, the Academy of Sciences is possibly the most popular destination for Bay Area schools’ field trips. The statement, which is truly frightening if you believe it, is seen by hundreds of school children almost every day. What kind of impact do you think such statements have on young, impressionable minds? It verges on emotional child abuse. The Academy staff should be ashamed of themselves, but I doubt they are.

Environmentalists are so fanatical about their Armageddon beliefs that they think terrifying school children is justified. Do these people ever think about the implications of what they say? Do they care?

The purpose of the “Rushing to Extinction” poster and similar statements is to deliberately frighten whoever reads it. Environmentalists apparently get a perverse thrill from scaring people and making them feel guilty for being members of the human race. The California Academy of Sciences is allowing itself to be used as a venue for manipulative propaganda.

The natural world is fascinating and magical. The best way to illustrate that is to stick with the facts. It’s too bad natural history museums don’t do so.

____________________

◼ Are We ‘Rushing to Extinction’? August 20, 2010

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.

This Recession Is Not Like the Others

As they used to say on Sesame Street, “One of these things is not like the others, one of these things is not the same.” The current recession “is not like the others.” At 33 months it is already more than three times longer than the average length of the other ten recessions we’ve had since WWII. There are no clear signs it will be ending anytime soon. Glimmers of a recovery appear from time to time, but most indicators remain depressed and many are worsening. On balance, the outlook is more negative than positive. Not since the Great Depression have we had two consecutive years of unemployment in excess of nine percent. What we’re seeing is economic stagnation.

Something else about the current situation that “is not like the others” is the defeatism of those in charge. President Obama’s economic advisors, Tim Geithner and Larry Summers specifically, have been warning that unemployment could remain painfully high for years to come. Vice President Biden has declared that we may never regain the eight million jobs lost over the past two years. I don’t think an administration’s spokesmen have ever before been so pessimistic, especially for the long term.

Mr. Obama and his advisors are not draftees. They asked for this job. They asked to be put in charge. They wanted us to believe that they were “the ones we’ve been waiting for.” In no uncertain terms they convinced voters that they would do a vastly superior job than that dufus cowboy George Bush. Now they have been reduced to pleading, “No one told us it was going to be hard!”

This raises a crucial question — why is the current recession so long and deep? A frequent focus of scientific research and analysis is the attempt to explain and account for differences or anomalies. This recession is “not like the others.” A new name has been invented — the Great Recession. It’s being said that 10 percent unemployment is “the new norm.” Why, exactly? What’s changed?

Past recessions have been largely self-correcting. Furthermore, they have self-corrected in a matter of a few months. Why is it taking so long for that to happen this time around? What’s standing in the way of the self-correcting mechanism?

Geithner, Summers, Biden and Obama are all saying “this time it’s different.” They can say that, of course, but they need to elaborate. They are making assertions that cry out for explanations. If you’re going to make a dramatic, unprecedented proclamation, you really ought to provide details and support. If you make a bold statement, you must have some idea as to why it’s so.

The answer is relatively obvious to anyone with open eyes. The overarching factor that is making this recession different is that the Obama agenda is qualitatively and quantitatively different from any previous president’s agenda. The anomaly of the current recession is the anomaly of Barak Obama’s political philosophy and worldview.

A fundamental conclusion of financial economics is that there are two main dimensions to investing — risk and return. What space and time are to physics, risk and return are to investing. When evaluating an investment opportunity, return is the good, risk is the bad. Another basic conclusion is that risk and uncertainty are just two ways to looking at the same thing. Risk is uncertainty in work clothes.

The Obama administration’s reckless and unprecedented restructuring of the economy has greatly increased the level of uncertainty for anyone thinking about investing, starting a new enterprise, or making consumption expenditures. Mr. Obama has turbo-charged the amount of uncertainty in the minds of decision makers. This is an administration with no brakes, and the ride is frightening.

The massive and rapidly growing federal debt overhanging the economy portends future tax increases. Those probable tax increases reduce the expected return of investments. The lapse of the Bush tax cuts is little more than four months away. The bad news is relatively certain, the good news is highly doubtful.

Mr. Obama and his spokesmen need to explain what’s going on with the economy, and how exactly their policies will cure our serious economic difficulties. If they can’t explain the nature of our problems, what are they doing? Are their policies based on nothing more than a hope and a prayer? Why should anyone have confidence in your corrective action if you don’t show that you understand the nature of the problem?

Mr. Obama and his advisors act as though they themselves are hapless victims of the Great Recession. They imply things have gotten so bad we’re just going to have to get used to it. This is pathetic. Rather than rising to the occasion and dealing with the challenge, they whine and blame the previous administration. They need to be rethinking their strategies and analyzing why their previous solutions have not worked. Unfortunately, because of their doctrinaire attitudes, that is extremely unlikely. They will never admit that the fundamental problem is them.

The president is losing the support of even his most ardent supporters. Arianna Huffington, for example, said recently, “The president put all his trust in the wrong economic team — an economic team that didn’t understand what was happening.”

The injuries done by the Obama administration are painful but not fatal. The U.S. economy has fundamental strengths that will allow it to recover eventually in spite of the damage done by the Obama administration.

More and more, voters are recognizing that electing Barak Obama president was a terrible mistake. In November they will have opportunities to begin reversing that mistake and start undoing the damage. As Sarah Palin said recently, “From my house I can see November.”

____________________

◼ This Recession Is Not Like the Others August 12, 2010

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.

'We interrupt your vacation fun for this important announcement...'

Recently I had the pleasure of spring skiing for three days in the scenic Lake Tahoe area. In almost all ways it was a completely enjoyable and positive experience. The snow was good, the lift lines non-existent, and the sun was shining (most of the time).

I gained useful and valuable tips in the lesson I took on the first day we spent at Squaw Valley. The best payoff from a lesson is practicing and seeing if you can apply what you've learned. Our second day was spent at nearby Alpine Meadows, another large and excellent facility. My time at Alpine Meadows, however, was slightly diminished by what you might call a gratuitous and incongruous distraction.

If you've ever been skiing you're familiar with riding on the chair lifts. Moving cables take the attached chairs up the slopes at about five miles an hour. The cables are held aloft by lift towers roughly 200-300 feet apart.

On the lift towers at Alpine Meadows are attached signs conveying the following fascinating bits of information: "Milk cartons take five years to decompose," "Plastic six-pack beverage holders take fifty years to decompose," "Aluminum cans take fifty years to decompose, "Leather takes five years to decompose," and "Styrofoam never decomposes." There were about a dozen other messages along the same theme, but you get the idea.

These informational gems raised a number of questions in my mind: Why are they telling me this? What am I supposed to do with this information? What led them to believe that a ski resort is an appropriate venue to educate people about relative durations of decomposition? Is the fact that it takes five years for a milk carton to decompose a good thing or a bad thing? Is that too fast or too slow? Since Styrofoam never decomposes, should I avoid it like the plague? If I need to be educated (or re-educated) why do they assume it's about waste management?

You and I could both at least guess about some possible answers. One purpose of the signs is to take advantage of a captive audience to enlist them in the great recycling crusade, whether or not they actually want to be enlistees. What kind of reaction are they hoping to generate? Remorse, despair, indignation, resolve, I'm not sure.

Skiing could be considered a somewhat decadent activity. It's not cheap. Lift tickets typically cost $60-$80. Renting skis, boots, and poles is another $50, about the same for a snow board and boots. A group lesson is $50, a private one is $120. Lodging adds another $100-$300 a night. For a family, it can be a very expensive weekend.

The patrons might be feeling guilty about how much fun they're having. They're probably a good "target of opportunity" for making them feel guilty about their selfish and profligate use of resources. The implicit message is "Don't go enjoying yourself too much, your lifestyle is generating residue that takes too long to decompose."

I've seen information posted on ski towers many times before, but it's always been relevant to skiing safety or courtesy, "Stay within designated boundaries," for example.

The primary purpose of a ski resort, I assume, is to make a profit by making it possible for people to have fun. Why compromise that experience? Why spoil the fun? I doubt that it's in the best interests of the resort owners. When I go someplace for recreation or entertainment it would be nice if that were the exclusive focus of the proprietors.

I imagine most readers of these signs don't react as I have. They're just the kinds of statements you commonly see these days. They're not exceptional or unexpected. For all I know other skiers might be fascinated by decomposition trivia.

My frustration, of course, is not really with the owners and management of a particular ski resort, but rather with the cultural climate that spawns such intrusive and annoying nonsense. It's a climate that gives far too many people a license to nag. ____________________

◼ 'We interrupt your vacation fun for this important announcement...'

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.

President Incompetent

American Thinker: President Incompetent http://bit.ly/crGZg9 // Ross nails it with this piece.

— Win 2016 (@win2016) February 18, 2010

_______________________

Whether or not you support President Obama's policies, one thing is becoming increasingly obvious: He simply lacks competence. The best indicator of this is his ineffectiveness in accomplishing any of his own objectives. His first year in office resembles the career of a quarterback who never completes a pass. His list of failures is all too familiar -- health care reform, closing Guantánamo, cap-and-trade, and so on. He has failed to accomplish any of his self-identified top priorities. Other than getting himself elected, he appears to have a very limited range of abilities.

For conservatives, the president's incompetence is a mixed blessing. Conservatives are breathing sighs of relief that health care reform and cap-and-trade have crashed and burned. For his supporters, his ineffectiveness must be painful to watch.

Nevertheless, the fact that the most powerful man in the world is incompetent does not make for a good situation. Unfortunately, he is in a position to do major damage, and he has, in fact, already done so. His poorly conceived economic policies have unnecessarily prolonged and deepened the recession. His foreign policy missteps have jeopardized our national security.

The frequency of the apologies and backtracks the president and his cabinet have had to make demonstrates that they don't seem to think before they speak or act. The president likes to make promises but seems to have no serious intention to actually deliver on them. Almost immediately after taking office, he promised to close Guantánamo. Doing so is obviously a much more complicated and difficult undertaking than he envisioned. As George H. W. Bush discovered, there's no such thing as a free promise. Bush's broken promise not to raise taxes cost him a second term.

Mr. Obama is also ineffective in helping fellow Democrats win elections. Unless his success rate improves, he will earn the title of "the biggest loser." Democrat candidates this year may well be telling him "thanks but no thanks."

The president is not a good strategist. He is not a good judge of probabilities. He has a tendency to pick fights he has little or no chance of winning. It almost appears that he likes losing.

Competence is mainly an issue for leaders of democratic countries. A dictator does not necessarily need to worry about it. A dictator gets things done through brute force, which is also the way he maintains his power. The citizenry pays a price for his incompetence, but the dictator himself does not.

Mr. Obama has surrounded himself with similarly incompetent personnel. Ann Coulter has described Joe Biden as "Obama's assassination insurance." A president's press secretary is his public spokesman and primary interface with the press. You have to wonder what possessed Obama to hire someone like Robert Gibbs for that position. Mr. Gibbs is not an impressive persona, to put it mildly. Numerous other cabinet members have also been an embarrassment.

Most of Mr. Obama's supporters have yet to admit that he is incompetent. It's becoming increasingly obvious, however, and they can't be happy with his lack of results. The evidence of his incompetence is bound to accumulate further, and denial will be increasingly hard to maintain.

If anyone is surprised by Mr. Obama's incompetence, you have to wonder why. When he was running for the presidency, on what basis would anyone have assumed that he was competent? He had about the thinnest resume of anyone who had ever run for the office, with virtually zero executive experience. He really was the "hope" candidate, elected by voters relying on hope rather than evidence or common sense.

Election results in New Jersey, Virginia, and Massachusetts demonstrate that many voters are suffering from buyer's remorse. Unfortunately, they have three years left on an unbreakable purchase contract.

What is the probability that Mr. Obama will "grow in office" and develop competence? It's not high. After the president gratuitously trashed his city for the second time, the mayor of Las Vegas, Oscar Goodman, observed that "the president is a real slow learner."

Mr. Obama seems to be immune to feedback. In fact, he brags about his stubbornness and refusal to give up on Obamacare in the face of overwhelming public disapproval and the high cost of prolonging a hopeless endeavor. The change candidate is himself unwilling to change.

Although Mr. Obama's incompetence will persist, other important corrective steps are already underway. Conservatives are more energized and motivated now than perhaps at any time in memory. We may very well see a Democrat electoral bloodbath in November. Judging from how much fun Scott Brown's victory was for conservatives, it could be a time to cherish. _______________________

This article originally ran on American Thinker. Ron Ross Ph.D. is an economist and author of The Unbeatable Market.

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.

_________________

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

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

◼ Don't Blame Reagan - 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.