Tuesday, April 19, 2016

Why I will miss Barack Obama

What follows is my April Op-Ed in the Orlando Sentinel
As the United States grinds ever closer to the Hillary versus Donald festival this fall, I have been reflecting on the presidency of Mr. Obama in preparation for lectures I will give my students. As I pour over the economic-policy proposals of Mrs. Clinton and Mr. Trump, it has dawned on me that 2017 may very well mark the first year — of many years in a row — that we will wish Barack Obama were still in office.
Let's look at it.
First, there is the issue of income taxes. Yes, Obama did in fact increase income-tax rates with the highest marginal tax bracket reaching 39.6 percent. Hillary Clinton wants it to hit 43.6 percent. Obama also championed the push for higher taxes on capital gains — arguing for a top rate of 28 percent. Clinton wants rates as high as 47.4 percent (Bill Clinton lowered it to 20 percent) depending on whether or not we keep our investments for the number of years she believes is best. Of course, compared to Bernie Sanders' plan for a top income-tax rate of 54 percent and his stated belief that even 90 percent might be reasonable, Hillary's "soak-the-rich" model looks downright magnanimous.
While Trump has called for much lower tax rates — and fewer brackets — his horrible understanding of the economics of international trade and immigration makes his economic vision for America worse than anything Obama has created over the past seven years.
Despite all of his economically illiterate rhetoric, Trump cannot show that liberalized trade has been bad for the United States. While Bill Clinton was in office, international trade between the U.S. and the rest of the world skyrocketed — and the unemployment rate fell to less than 4 percent while incomes increased and the American economy experienced record growth.
Don't tell that to Mr. Clinton's wife, though. She is on record criticizing her husband's pro-trade policies (without mentioning him by name) and even though she initially supported the new Trans-Pacific Partnership, she is now feeling the "I hate free trade" heat from Bernie Sanders and has backed away from supporting this treaty.
That leaves no one from either party arguing for the very economic practices that have created trillions in global wealth. Rather, all three of the remaining major candidates are pushing us back to the disastrous 1930s when the Smoot-Hawley Tariff Act destroyed international trade and accelerated the march to World War II.
Meanwhile, Trump is proposing to deport 11 million workers/consumers/taxpayers all in the name of creating the illusion that unemployed Americans will now be able to work in agricultural fields and in meat-packing plants.
His deportation plan in so economically disastrous in its potential that economists stand in rare unison to decry it. The impact on consumer prices, the gross domestic product, border town economies, agriculture, construction and countless other areas of our economy would be enormous — and negative.
I suppose that is OK because on the other side, we have Hillary and Bernie blaming everything from global warming to childhood obesity on Wall Street. Each of the Democratic candidates has a long list of promised "crackdowns" and regulations on the "evil" men and women who provide capital to our nation's economic infrastructure. The last time I checked, Wall Street has helped bring greater opportunities to new businesses than the federal government ever has.
No matter. It is time that the folks who have "rigged" the economy pay dearly — while we sit back and watch capital become more expensive and less available.
I would be the first among many economists who would give Barack Obama a very low grade for his economic policies. The list of bad decisions is long — and our meager economic recovery punctuates this point.
Yet, as I and other economists look into our crystal balls at what a Trump or Clinton or Sanders presidency would mean, we see even worse years ahead.
Enjoy your retirement, Mr. Obama — you don't look so bad after all.

Tuesday, March 15, 2016

Trump and the Danger of American Ignorance

What follows is my most recent Op-Ed in the Orlando Sentinel.  Thanks for reading and sharing!

In 1944, Austrian economist Friedrich Hayek published his landmark book, The Road to Serfdom.   Written during the height of World War II, it was meant as a warning to the United States and Great Britain that the flawed economic policies being pursued by each nation would eventually lead to an outcome that had befallen the German people living under the tyranny of Adolf Hitler.

Hayek, in a chapter on why the worst types of people often end up on top of political movements argued that:

“…. in general the higher the education and intelligence of individuals becomes, the more their views and tastes are differentiated and the less likely they are to agree on a particular hierarchy of values. It is a corollary of this that if we wish to find a high degree of uniformity and similarity of outlook, we have to descend to the regions of lower moral and intellectual standards where the more primitive and "common" instincts and tastes prevail. This does not mean that the majority of people have low moral standards; it merely means that the largest group of people whose values are very similar are the people with low standards.

If, however, a potential dictator had to rely entirely on those whose uncomplicated and primitive instincts happen to be very similar, their number would scarcely give sufficient weight to their endeavors. He will have to increase their numbers by converting more to the same simple creed.

Here comes in the second negative principle of selection: he will be able to obtain the support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently. It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party.”

Could there be a more prophetic statement to encapsulate the Republican party in 2016? 

The Republicans, once a party that stood for Constitutional rights, free trade, pro-business immigration policies and economic freedom has devolved, under the “leadership” of Donald Trump.  It has gone through a bizarre metamorphosis that is driven by economic ignorance, bigotry and the art of blaming others for the ills that have come upon our nation.

Hayek would argue that Trump has successfully descended into the lower regions of conservative “thought” by insisting that Mexican immigrants, Muslim refugees and trade deals with China are at the root of our country’s problems.  Of course no Trump supporter seems interested in the economic facts concerning the benefits immigration; the low probability of refugee-generated terrorist attacks and the historical merits of international trade.  They simply see in Trump a savior who vulgarly and bombastically speaks for them.  Even when detractors point out the fact that Trump has been a champion for the use of eminent domain to take away the property rights of other citizens or that he routinely shows virtually no understanding of the checks and balances of the Constitution, his fans simply ignore the evidence and cheer him for “telling it like it is.” 

It is ironic that only three decades ago our nation was led by a Republican who supported amnesty for illegal immigrants; free markets and liberalized trade agreements and managed to assist Soviet dissidents who wanted to flee to America all while showing the world that America could exhibit genuine leadership in the global fight against Communism without bluster, threats or other irresponsible acts.  

If Ronald Reagan were running against Trump today his reasoned and intellectual approach to foreign and economic policy would probably get him booed off the debate stage by angry Americans who are more interested in discussions about hand size and the “beauty” of torture.

I hope Hillary Clinton is watching closely because this fall she is going to have to be the composed adult in the room that keeps our nation from electing a person who is much more like the leader Hayek was warning us about.

Monday, February 29, 2016

Teaching Economics to Bernie Sanders Supporters

What follows is my February 27, 2016 Op-Ed in The Chicago Tribune.  Enjoy!

1987 I walked into a college classroom as an educator for the first time.  Ronald Reagan was in the last two years of his second term and the American economy was churning at full steam.  Since the fall of 1982 the American economy had grown by near-record amounts for a nation at peace.  The nation was on the way towards creating 20 million jobs with falling inflation and unemployment rates.

During those years teaching college students the principles of capitalism was easy.   They were living through evidence that when allowed to pursue one’s self-interest – and keep the fruits of their labor – an economy could lift the standard of living up and down the income scale.    It is important to note that in 1981 when most of my students were in middle or high school the top marginal income tax rate was 70%.  Reagan had reduced that figure through two tax cuts that dropped the top income tax bracket to only 28%.  My students knew that when they graduated they would be free to pursue their careers and start businesses without being shaken down by the IRS.

Today my students do not have the same reason to be optimistic.  They have seen their parents suffer the vestiges of the ‘Great Recession’.  They have grown up during a time when crony capitalism has invaded the halls of Congress while rising tax rates and historic increases in federal regulations have sapped the energy our nation’s economy needs to create real economic growth.  By every measure, the 2009-2016 economic recovery is the weakest since World War II.  Even our falling unemployment rate masks the reality that nearly 90 million Americans have withdrawn from the labor force, while others work only part-time or in jobs that do not match their skills, training or education.

In the wake of this new reality facing America’s young people it would seem to make the most sense that they would be looking for another Reagan.   For my students who identify as Democrats I have walked them through John F. Kennedy’s massive tax cut in 1963 and Bill Clinton’s final six years when taxes on investments, savings and home sales fell and sane fiscal management of the budget prevailed.

Yet, my students – like millions of other young voters – seem to believe that Bernie Sanders can save their futures.   Sanders, with his plan to provide Medicare for all; free university tuition; increased social security and family leave benefits, is an economically seductive candidate for people who are afraid that they have no economic future and therefore need economic security from that future.

However, as an economics professor, my job in an election year is to compare and contrast the major candidates economic plans and point out deficiencies in each. 

This is where the Bernie Sanders wake-up call has occurred. 

When my students see his tax plan that increases income tax rates on low, middle and upper-income workers – with rates rising to more than 54% for top earners – they learn that In America’s 102 year history of rising and falling income tax rates, in decades when marginal rates fell (see the 1920s, 1960s and 1980s, for example), the economy boomed and the government actually received greater tax revenue.    In time periods when the government adopted a “soak the rich” mindset (1930s, 1970s and in recent times) the economy performed poorly and revenues never rose by as much as was predicted.

Moreover, they have learned that the Sander’s spending plans – which the Wall Street Journal has estimated would total $18 trillion – would further increase the national debt, and would saddle their generation with massive tax and interest rate obligations and make their college degree worth less -  all in the name of expanding the social welfare network. 

In short, young people today are pinning their hopes on a fairy tale.  That fairy tale informs them that they can get free things from the government and no longer live with so much worry.

When they see that nothing is free and that they will have to pay for Bernie Sanders imitation of Santa Claus, that is when the real worrying begins.

Tuesday, January 19, 2016

Why I deserve part of the Power Ball jackpot

What follows is my most recent Orlando Sentinel Op-Ed - enjoy!
Once every 3-4 years, usually while standing in a local 7-11 store, I hear a voice that says, “Hey man, buy a lottery ticket.”  Like an idiot, I listen to the voice and metaphorically flush a dollar or two down the toilet.    When I do what the voice says I always pick my own numbers (more on that later) rather than let some computer program steer me wrong.  Of course I know that my numbers give me the same odds of winning the lottery as being struck by lightning while fighting off a great white shark sporting an “I love Donald Trump” tattoo, but so what?

This week, that darn voice was at it again.  I was in line to buy Gatorade wearing my lawn-mowing clothes.  These clothes – some hole-ridden jeans from the last century and a paint-stained “Bigfoot for President” shirt, allowed me to blend in with the Power Ball line without tipping people off that I am a professional economist with countless hours of probability theory work under my belt.

I did not want anyone to walk in and say, “Hey, Professor Chambless, what are you doing in this line?” so instead of picking my numbers I mumbled “quick pick, please” and got out of there.

On the morning of January 14th I was scanning this newspaper when there in front of me was a headline, “Economics Professor loses Power Ball jackpot for stupidly refusing to pick his own numbers.”

The winning numbers were 4 (my favorite baseball player of all-time and the guy my first son was named after); 8 (my high-school baseball number); 27 (my high school football number); 19 (my oldest son’s high school football number) 34 and 10 (my youngest son’s baseball number.)  What about 34?  Oh, nothing big there except this.

This season I am coaching a local high school baseball team.  One of the kids coming out for the team is a kid who reminds me of me back when I was a kid.  I have been discussing this guy all week with my sons.  That kid’s requested number?  You guessed it…..34!   This means all week somewhere, somebody was sending me cosmic hints.    All I had to do was stick with the numbers that made sense to me and then throw in the number sent from the heavens and I would be smoking a cigar right now trying to figure out how large of a cabin to build in Northern Minnesota.    I was even planning to give most of the money away!  Millions to my church.  Hundreds of thousands to friends and family and dozens to people I do not like much.

Since I was supposed to share in this incredible jackpot and was victimized by social pressure that economists should not buy lottery tickets, I am demanding the following.

I want to submit my case to the government and have it examined by the greatest lie-detecting machinery known to mankind.  When I pass this test, I want to government to set aside a portion of the tax revenue it will collect from the Power Ball and start a new welfare program for all truth-telling lottery losers.  I would be the first recipient of tax dollars from this fund.

After all, just because I made a poor choice and refused to put in the effort to work on my numbers does not mean I am not entitled.  I think in this case I can show that I am as deserving as other folks who ostensibly make the same claim on our tax dollars every day.

In the meantime, I think I will take my case directly to the three people who won and see if they would be willing to help out an economist who buys stupid lottery tickets while wearing Bigfoot shirts.

Wednesday, December 2, 2015

A message for crybaby college students

This is Not a Day Care. It’s a University!

Dr. Everett Piper, President
Oklahoma Wesleyan University
This past week, I actually had a student come forward after a university chapel service and complain because he felt “victimized” by a sermon on the topic of 1 Corinthians 13. It appears that this young scholar felt offended because a homily on love made him feel bad for not showing love. In his mind, the speaker was wrong for making him, and his peers, feel uncomfortable.
I’m not making this up. Our culture has actually taught our kids to be this self-absorbed and narcissistic. Any time their feelings are hurt, they are the victims. Anyone who dares challenge them and, thus, makes them “feel bad” about themselves, is a “hater,” a “bigot,” an “oppressor,” and a “victimizer.”
I have a message for this young man and all others who care to listen. That feeling of discomfort you have after listening to a sermon is called a conscience. An altar call is supposed to make you feel bad. It is supposed to make you feel guilty. The goal of many a good sermon is to get you to confess your sins—not coddle you in your selfishness. The primary objective of the Church and the Christian faith is your confession, not your self-actualization.
So here’s my advice:
If you want the chaplain to tell you you’re a victim rather than tell you that you need virtue, this may not be the university you’re looking for. If you want to complain about a sermon that makes you feel less than loving for not showing love, this might be the wrong place.
If you’re more interested in playing the “hater” card than you are in confessing your own hate; if you want to arrogantly lecture, rather than humbly learn; if you don’t want to feel guilt in your soul when you are guilty of sin; if you want to be enabled rather than confronted, there are many universities across the land (in Missouri and elsewhere) that will give you exactly what you want, but Oklahoma Wesleyan isn’t one of them.
At OKWU, we teach you to be selfless rather than self-centered. We are more interested in you practicing personal forgiveness than political revenge. We want you to model interpersonal reconciliation rather than foment personal conflict. We believe the content of your character is more important than the color of your skin. We don’t believe that you have been victimized every time you feel guilty and we don’t issue “trigger warnings” before altar calls.
Oklahoma Wesleyan is not a “safe place”, but rather, a place to learn: to learn that life isn’t about you, but about others; that the bad feeling you have while listening to a sermon is called guilt; that the way to address it is to repent of everything that’s wrong with you rather than blame others for everything that’s wrong with them. This is a place where you will quickly learn that you need to grow up.
This is not a day care. This is a university!

Wednesday, November 18, 2015

A Libertarian perspective on Syrian refugees

This won't take long....

As a Libertarian I believe that all human beings have a God-given right to life, liberty and their pursuit of happiness.  These rights do not come from government.  We are born with them. 

If a person in one place decides that their odds of having a life, liberty and greater happiness would exist in some other place, they should be allowed to leave the place where they are and move to the place they want to be.

When they arrive in the new place they should be guaranteed nothing but their three inherent rights.  No welfare, no special treatment, nothing.  The new arrival to the new place should be expected to look around and see opportunities where they exist and then pursue those opportunities. 

If charities, churches, mosques and synagogues want to chip in and help with the transition, so be it.  That is also part of Libertarian ideology, that we have the right to voluntarily part with our private property to aid other human beings.

Once the person is in their new home they need to understand that if they violate the right to life, liberty and property of others, the rule of law will deal with them.  As long as they stay out of trouble and simply pursue their interests - peacefully - the government should not bother them.

Apparently, one of the Paris attackers had come in to France under the guise that he was a Syrian refugee seeking protection from ISIS.  One. 

Now we are seeing an increasing number of American states blocking Syrian refugees.

This shows that our governments do not understand probability theory.

Look at the cities within the states blocking refugees.  There will be more people murdered in Houston, Orlando and Birmingham by American thugs than we will see murders carried out by fake Syrian refugees.

Yet, in our panic we are now doing what is mean, stupid and counterproductive.

The more people we turn away who just want a chance to have a better life, the more we create the impression that America is not what it was supposed to be - a place where the tired, hungry masses can pursue the American Dream.

Being  human beings and being an Americans should mean more than what we are doing now.

Monday, November 9, 2015

Can Democrats enjoy falling gas prices?

What follows is my November 8, 2015 column in The Orlando Sentinel.  Enjoy and pass it on to your favorite liberal!
Now that Thanksgiving is near, millions of Americans are making plans to get in a car and drive somewhere to enjoy turkey, football and loose clothing with friends and relatives. According to AAA, in 2014, 41.3 million people drove over 50 miles to enjoy this national holiday. In recent years, this annual road trip has not come cheap. Last year, the average national price of a gallon of gasoline was $2.81. The year before gas was $3.29. In 2012, it was over $3.40 per gallon. This year, barring some unforeseen calamity, it looks like American drivers are going to be able to fill their tanks for around $2, or less, per gallon.
This is welcome news for those of us that have budgets and would like to save money wherever we can. After all, for an SUV with a 20-gallon tank we are talking about savings of almost $28 per tank compared to three years ago. That is enough money to buy a really nice turkey or enough cans of cranberry sauce to keep your family in leftovers until Christmas.
Yet, I wonder if everyone is happy about this turn of events.
Clearly, the oil companies, OPEC and everyone working in the oil-rich regions of North Dakota and Texas are not happy. Profits are down, job losses are up and low oil prices threaten to destabilize parts of the country that have grown dependent on the oil boom economy.
But there is another group that might be — or should be — irked about the downward pressure on prices. That group is comprised of every non-hypocritical registered Democrat in the United States.
Consider the facts. Republicans do not really care much about climate change and often argue that the global-warming alarmists are relying on faulty, or worse, contrived "evidence" to push our country toward higher carbon taxes, the elimination of coal-fired power plants and into an economy that relies on windmills to keep our lights on.
Libertarian-types argue that if global warming is being caused more by human beings than natural cycles on the planet, then all we have to do is wait for profit-seekers to produce the energy-efficient appliances, long-lasting light bulbs and electric-powered cars that people might want to buy in order to save the planet. The last time I checked, the profit-motive is beautifully playing on our possibly irrational fears and we are seeing record production of all sorts of new "green" products.
Democrats, on the other hand, keep telling us that 100 percent of climate change is caused by human beings who selfishly choose to drive cars rather than take crowded, slow buses and enjoy air conditioning during the summer rather than sweat into buckets that we can use to water our … oh, that's right, we are not supposed to have lawns, either.
Democrats keep warning us that if we do not cut our CO2 emissions this very second, we are going to see Orlando homes called beachfront property while oranges will be harvested in Minnesota during month of January.
Therefore, if Democrats are honest, they will admit that falling gas prices is a horrific development because, by the law of demand, as gas prices fall, more gas will be burned, more CO2 will be released and Alaska will be one step closer to cactus farming.
Thus, the only honest solution for democrats this Thanksgiving is for them to stay off the roads and hope that somehow the oil companies and OPEC can find a way to drive prices back to $4 per gallon.
Anything less would be disingenuous.
Happy Thanksgiving and pass the garlic mashed potatoes financed by low gas prices.

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