Taxpayer funding of higher education is a forced transfer to the relatively wealthy
Socialist author Robert Kuttner once called Proposition 13, California’s 1978 property-tax-cut initiative, the revolt of the haves. The latest opposition by UC students to a 32% increase in tuition is a revolt of the “will-haves.”
Milton Friedman used to remark that the California government, with its state funding of higher education, taxed the residents of Watts to pay for the residents of Beverly Hills. I think Friedman exaggerated substantially. Even though the California’s tax system relies heavily on sales taxes, which probably makes the state tax system on net somewhat regressive, it’s still the case that a given Beverly Hills family pays much more in taxes than a given family in Watts. But Friedman also focused on family income of the student, and that’s misleading.
I do not endorse some of the overheated added commentary, but I believe Friedrich von Hayek’s warnings of the long terms dangers of a planned economy are just as prescient today as when the book The Road to Serfdom was published in 1944. It is a short book and well worth the time it takes to read it. Some memorable quotes of von Hayek: Continue reading
There is something in me which, when it sees to related numbers, wants to immediately do a calculation, so when I saw a news story stating that the $215 billion in stimulous money given out thus far had resulted in 640,329 jobs, my first question was, “How much is that per job?”
Not too shabby, eh? I’d like one of them jobs just fine.
Whole Foods CEO John Mackey attracted quite a bit of ire a few months back when he wrote an editorial for the Wall Street Journal in which he advocated that Obama and the congress consider an approach to health care reform similar to the health benefits which Whole Foods provides its employees (centered around high deductible coverage and health savings accounts.) Within days, several progressive sites were calling for boycotts of Whole Foods, seeing Mackey as giving aid to anti-Obama forces. Mackey himself is somewhat bemused by the firestorm his editorial caused.
“President Obama called for constructive suggestions for health-care reform,” he explains. “I took him at his word.” Mr. Mackey continues: “It just seems to me there are some fundamental reforms that we’ve adopted at Whole Foods that would make health care much more affordable for the uninsured.”
Though he’s not gunning to cause any more controversies, Mackey has an interesting weekend interview in the Journal where he talks, among other things, about his philosophy regarding capitalism and business, and how it’s changed over the years since he founded Whole Foods with $45,000 in friends and family-raised seed funding in 1978.
“Before I started my business, my political philosophy was that business is evil and government is good. I think I just breathed it in with the culture. Businesses, they’re selfish because they’re trying to make money.”
[This is neither American nor Catholic, but it is, I like to imagine, mildly amusing in a bored-parent-on-a-Friday kind of way.]
As you can perhaps imagine, there is much reading in the Darwin family, as we consider it necessary to corrupt the dear little tabula rasas of our children with a mixture of facts and fairy stories from the very youngest possible age. And how better may one corrupt the youth then by wrapping up the harsh teachings of the dismal science in the charming trappings of a bevy of dear little fuzzy animals? Do not allow these subtle deceptions, gentle reader! As I shall demonstrate, under the cover of a whimsical, Edwardian children’s authoress, lurks a deadly capitalist in sheep’s clothing.
THE TALE OF
GINGER & PICKLES
Once upon a time there was a village shop. The name over the window was “Ginger and Pickles.”
Every so often, when dealing with Church projects and non-profit work in general, one hears someone who does a lot of volunteer work toss off a disparaging remark alone the lines of, “Oh, those people. They only give money. You’d never see them down here working.”
Sometimes this is used to support a claim as to “who really cares” about an issue, along the lines of:
“Sure, you’ll find lots of [members of group X] a pro-life fundraising banquets, but you’ll never see them working at a crisis pregnancy center.”
“[Members of group X] may give money to ‘charity’, but you’ll never find them filling boxes down at the foodbank or working with at-risk kids.”
This has always struck me as a somewhat unfair criticism, for reasons I will get into in a minute, but I was particularly reminded of this last week when I had to go down to the diocesan offices to be trained to count and report the collections for the diocesan Catholic Services Appeal. The annual appeal provides a about the third of the operating expenses for the diocese — and since I deal with financial-ish stuff at work and I’m going to be rotating off the pastoral council in a couple months, I half volunteered, half was dragooned, into helping out with the processing of the collection this year at the parish. At the training session, I was particularly struck by the numbers of where the money in the appeal comes from:
We’re often told that we shouldn’t trust people whose only interest is to make a profit from us. I ran into a brief piece by economist Russ Roberts which stands that conventional wisdom on its head in an interesting way.
The other day I had to get some important tax receipts to my accountant. He’s in St. Louis, it was getting close to April 15, and it was very important that the papers didn’t get lost. To give my accountant plenty of time, I wanted the papers to arrive the next morning.
So what did I do? My first choice was to get on a plane and deliver the letter myself. Too expensive. Too much time.
So I did the next best thing. I went down to the airport and found someone headed to St. Louis. I told her how important it was for my accountant to have my receipts by the next day. Fortunately, she seemed really nice. She said she’d be happy to help me out. I sealed up the envelope, and she promised not to open it after I left.
The deepest downturn in the U.S. economy since the Great Depression may finally shrink the gap between the very best-off Americans and everyone else.
If so, it won’t be by lifting up the bottom. It will be by pulling down the top.
Over the past 30 years, chief executives, Wall Street bankers and traders, law-firm partners and such amassed ever-greater incomes, while the incomes of factory workers, teachers, office managers and others in the middle grew much more slowly. In 2007, the top 1% of U.S. families accounted for 23.5% of all personal income in the U.S., according to economists Emmanuel Saez of the University of California at Berkeley and Thomas Piketty of the Paris School of Economics. That was a level not seen since the Roaring Twenties.
The top 1%’s share appears to be falling fast. Mr. Saez and other economists expect income going to the top 1% of taxpayers — currently, those with about $400,000 a year — will drop to somewhere between 15% and 19% of all income by 2010. That still would leave income distribution more top-heavy in the U.S. than in many other countries.
I was recently listening to an interview with Stanley Engerman, co-author of Time on the Cross: The Economics of American Slavery. It was an interesting discussion overall, but what particularly caught my attention was basically a side-note.
Engerman referenced Adam Smith’s understanding of slavery which he described as being that slaves had no incentive towards greater productivity, with the result that using slave labor rather than free labor was inefficient. Smith thus attributed the fact that people use slavery despite it’s inefficiency to the will to domineer over others:
But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only, and not by any interest of his own. In ancient Italy, how much the cultivation of corn degenerated, how unprofitable it became to the master when it fell under the management of slaves, is remarked by both Pliny and Columella. In the time of Aristotle it had not been much better in ancient Greece. Speaking of the ideal republic described in the laws of Plato, to maintain five thousand idle men (the number of warriors supposed necessary for its defence) together with their women and servants, would require, he says, a territory of boundless extent and fertility, like the plains of Babylon.
I ran into this quote going through an old EconTalk the other day, and thought it interesting:
As economists, we’re specialists in prudence only.
That, as you say, is not what Adam Smith recommended. Not at all. I and a number of other people would like to get back to a Smithian economics, which although it didn’t throw away the very numerous insights that we get from thinking of people as maximizers — maximizers in this narrow sense — acknowledges that temperence and justice and love and courage and hope and faith can change the way the economy works.
I’m trying to decide if I agree with it or not. I would certainly agree that economics basically only looks at certain prudential concerns, it doesn’t consider humanistic or theological questions. However, I’m not sure if economics should acknowledge those concerns, or if it is more the case that economists (and others dealing with the field) should clearly acknowledge that there is much more to any question than the question of what is most economically efficient.
There’s been much discussion of late about what other country’s health care apparatus the US should consider emulating, and in such discussions France is often mentioned. Now, all cheerful ribbing against the French aside, their health care system is not nearly as “socialized” or nearly as afflicted by treatment denials and waiting lists as those of the UK or Canada. It is also rather more like the system that the US already has, in that it is a hybrid public/private system, though in their case there is a guaranteed base level of coverage everyone has through the government (funded via a hefty payroll tax — not unlike Medicare) which most people supplement with private coverage. Most doctors are in private practice, and 25% do not even accept the public plan, just as some practices in the US do not accept Medicare. However, everyone does have that minimum level of coverage, and the French spend a lower percentage of their GDP on health care than the US (11% versus 16%) which when you take into account that France’s GDP per capita is a good deal smaller than that of the US (which is the polite, economist way of saying it’s a poorer country) works out to the US spending about twice as many dollars per person on health care, while still not having universal coverage.
So what are we waiting for? Why don’t we go enact the French system here right now? Why doesn’t Obama put on a jaunty beret, dangle a cigarette coolly from the corner of his mouth, hoist a glass of wine, and just say, “Oui, nous pouvons.”
As regular readers of this blog know, I have been sounding the tocsin regarding government spending since the Bailout Swindle of 2008. Here is one of my posts in which I list other posts I have written on the subject.
“Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. The following chart shows our projection of federal debt relative to GDP under the two scenarios we modeled.”
His chart is at the top of this post.
Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.
He concludes on this somber note:
The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.
This is fiscal madness. We have the wealth and the ability to solve this problem by spending cuts, and minor tax increases if, and only if, combined with meaningful and deep spending cuts. What we lack is the political will. We are destroying the future prosperity of our kids because of current political cowardice, folly and inertia.
I may have to turn in my Catholic Geek card for this admission, but I still haven’t finished reading Caritas in Veritate, I’m only about ten pages in. Though I’ve tried the usual background reading, Benedict’s prose (though more readable than some of his predecessor’s) is not really the sort of thing one can read one paragraph at a time in between working. And while I do usually have 30-60min between 11pm and midnight in which to read before falling asleep, I must confess I’ve mostly been devoting that time to finishing a spy novel rather than turning tired eyes to Catholic social thought.
However, if I may nonetheless take the liberty of addressing some of the general discussion of economics and morality which has been stirred up by the encyclical, there is what seems to me a familiar dynamic coming into play as people discuss whether the Church can or should teach on matters of economics. The situation strikes me as somewhat similar to the argument about whether the Church can teach on matters of science.
On science, I would like to think, the terrain if fairly well understood. The Church does not and cannot teach with any particular authority on scientific theories themselves: Is the universe six billion years old, or only 6000? Is string theory a load of rubbish? Does the Earth revolve around the Sun? Will the expansion since the “big bang” end in a “big crunch” or in the heat death of the universe?
Given that the Church offers no exacting technical program for getting the job of the common good accomplished in any given state or global community. But does offer a blueprint of values and insights into the necessity of applying the Gospel to our social conditions- to include economics- I offer this past guest column I wrote shortly after my run for Florida state house. It addresses some conditions particular to the state of Florida, but it contains an outline of general responsibilities that could be applied at any level of governance.
As a result of previous discussion on this blog, I invited one of our regular commentors, Anthony Chelette, who works as an advertising agency art director, to read the Pontifical Council on Social Communications document Ethics In Advertising and write his thoughts on it as a person working in the field. He was kind enough to do so, and thus results the following guest post.
I’d like to thank Anthony for taking the time to read the document and write this response over the last several weeks. I hope this will lead to fruitful discussion and greater understanding of the field and this response to it.
–Brendan Hodge (DarwinCatholic)
Certain ideas are intrinsically a part of being American. Liberty. Individualism. Capitalism. But often another ‘ism’— consumerism— is associated with the American experience. Catholics appropriately abhor what consumerism is — an insatiable search for happiness through material gratification— and some point a finger at advertising as a pusher for ‘unneeded’ products of questionable value. Such opinion holds advertisers partially responsible for behavior that distracts from moral progress and discourages the ordering of economies.
The Church has always had a keen eye on how the desire for material satisfaction erects walls between the human person and his true destiny in Heaven. Jesus himself recognized that love for possessions easily make men willing slaves. Suddenly, man is more obedient to besting his Guitar Hero score than Christ’s teachings.