June 11 2013

The War on Prosperity

Charlotte Hays

We’ve seen an attempt to set citizen against citizen by the disheartening class warfare rhetoric of recent years. But of course the real war against citizens is a bad economy.

Patrice took a look at the latest job numbers, and now Carl Schramm of Forbes shows how the poor in particular suffer from a lousy economy. And Schramm thinks it is likely to remain lousy:

Indeed, I believe that the recent GDP “recovery” (an unsatisfactory 2.5 percent annualized in government estimates) of Q1 from the disastrous Q4 of last year will likely be followed by a very disappointing final result for the year.

There is a very real chance that as the Affordable Care Act with its explicit and hidden taxes takes hold that we may seldom if ever see annualized growth of 3 percent again!

In other words, the administration that seeks to stir up ill will against “millionaires and billionaires,” who are supposedly harming the poor, is the real culprit. Washington’s political class, Schramm notes, are true believers who continue to argue for such failed policies as higher taxes, which they “actually believe” will bring in more government revenue.

Schramm writes:

More taxes coupled with nominally positive interest rates will produce lower levels of capital investment, reduced numbers of new firms, and continuously lower levels of real employment.  Oh, and let’s add to all this the presumed movement of 1/6th of the economy, healthcare, onto the federal budget. For good measure throw in the IRS scandal – its existence touching every business decision – for evidence that this same hubristic federal government seems to be losing its credibility over economic affairs…

The big government types love to portray themselves as advocates of the poor. Nothing could be further from the truth:

The moral implications of non-recovery causes Washington to look culpable for human costs that politicians would just as soon not consider.  In every recession or slow-growth situation, every one of them, the poor pay a higher price. Just the same, in most recoveries the poor do better than the rich.  Think about it.  Right now well off people hardly know that recession-like conditions persist.  In fact, the incomes of the top one percent have climbed steadily through the last few years.

Poorer Americans, including black people, have had to deal with the problem of chronic unemployment and retreat entirely from the labor force. How is it that advocates for the poor don’t really seem to understand that when our economy doesn’t grow there is no possible way that poverty will ever be reduced?  Perhaps it’s because the poor are now permanently attended to by the profession of community advocates.

One of the interesting observations Schramm makes concerns what might have happened if the U.S. had recovered from the Great Depression of the 1930s more quickly. What if FDR, who was largely ignorant of economics, but who set “the global price of gold in his bed every morning,” had pursued different policies?

If the U.S. had come back from the Great Depression more quickly, Schramm suggests, Michael Harrington might not have had the raw material to write The Other America: Poverty in the United States, the bible of "war on poverty" crowd. I’d trade Harrington’s classic for getting people out of poverty any day of the week. And I’d prefer the unemployed get jobs to more class warfare rhetoric from President Obama.

 

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