Monday, September 26, 2016
The following is my September 24, 2016 Op-Ed in The Orlando Sentinel. Enjoy tonight's debate...
As the United States inches closer to one of the most anticipated — and dreaded — elections in our nation's history, we should all be looking at which candidate can promote the most economic growth.
America's last recession ended in June 2009. Since then, the United States has endured the slowest economic recovery since World War II. While median incomes are finally rising, we are still below the earnings achieved before the last recession began. Unemployment is 4.9 percent, but we have the lowest labor-force participation rate in 30 years as millions of Americans have dropped out.
In the 1960 election, John F. Kennedy promised to create 5 percent economic growth. This was an astounding goal, given the three recessions that had occurred during the 1950s. 1n 1962, Kennedy called for a massive cut in corporate and personal income-tax rates. His tax plan passed in early 1964 and the 1960s saw his promise of 5 percent growth come true — all while federal tax revenues doubled.
Ronald Reagan pulled off the same results following the stagflation of the 1970s. His two tax cuts pushed the top income-tax rate from 70 percent to 28 percent and, along with his successful continuation of Jimmy Carter's effort to deregulate the economy, led to record economic growth and a near doubling of income-tax revenue.
While Trump should be commended for his recent proposal to lower income-tax rates and fight the growth of costly, and job-killing government regulations, his other ideas are so bad that any gains in economic growth from lower taxes and regulations will be more than offset by the economic costs created by his trade, immigration and social-welfare plans.
On trade, he wants to pull out of NAFTA, reject the Trans-Pacific Partnership and impose tariffs of 45 percent and 35 percent on China and Mexico, respectively. As reported recently in The Wall Street Journal, the Peterson Institute ran several models of his trade policies and found that this plan would lead to a recession within three years and as many as 5 million jobs lost.
Trump's vision of a border wall and deportation of nearly all unauthorized immigrants would, according to the American Action Forum economists, lead to an increase in the national debt by $400 billion while reducing the gross domestic product by $1 trillion as 11 million consumers and workers were sent packing. This 6.4 percent reduction in the labor force would also fuel inflation in housing and food as labor shortages lead to higher production costs.
Throw in his plan to expand Social Security benefits, and you have a recipe for exploding debt, economic contraction and higher unemployment rates.
Hillary — who apparently was not paying attention to her husband's highly productive economic policies from 1994-2000 — also deserves an F in economics.
After giving dozens of speeches supporting free trade, she now rejects open markets. Her trade policies are also projected by economists to be recessionary, but not as much as Trump's. She also proposes a massive increase in capital-gains taxes (her husband lowered the tax on investments to 20 percent, down from Reagan's 28 percent); higher marginal income-tax rates; an exit-tax on companies leaving America and more government spending on infrastructure.
Higher capital-gains taxes will reduce investments in new businesses or business expansion. Moreover, raising income taxes will not only not yield the revenue she thinks she will get, but it will slow the American economy. She claims the rich do not pay their "fair share" of income taxes, but according to IRS data, the top 5 percent of taxpayers already pay more than 50 percent of the tax burden.
America's 35 percent corporate income-tax rate is the highest in the industrialized world. Instead of raising this even more for companies planning to exit, Clinton should follow Ireland's lead and lower this rate so more companies will want to enter the United States.
Finally, from Franklin Roosevelt's New Deal through President Obama's 2009 stimulus package of more than $800 billion, we have seen promise after promise that government spending will create a multiplier effect and thus a booming economy. This concept has never produced the results predicted. Every $1 spent by government on a new bridge, for example, is $1 taken from a business or an individual that could have been spent on something else. We can see the new bridge and the jobs created building it. We cannot see the jobs lost from taking this money to begin with.
I sincerely hope that whoever wins this November will wise up and change his or her current plans. If the new president doesn't, the next four years will make us long for the slow-growth days of Barack Obama.
Tuesday, August 30, 2016
This week in my classes I handed out a sheet of paper to all 105 of my fall students as they walked into class on day one. They were asked to indicate whom they would vote for in the 2016 presidential election. They were given five choices - Hillary, Donald, Gary Johnson, Jill Stein and a write in candidate. Then, they were asked to identify one specific policy proposal from the candidate of their choice and fully explain why they believed this policy would benefit the United States.
First, the result of the poll:
Hillary Clinton - 52 votes (49.5%)
Donald Trump - 19 votes (18%)
Gary Johnson - 19 votes (18%)
Jill Stein - 1 vote
I was a bit surprised by the number of students who even knew about the Libertarian candidate - and hopefully followers of this blog will find some hope in this result - but what I was really interested in was why they supported the person they picked.
Of course, for Donald Trump, all 19 students mentioned kicking illegal immigrants out, or building a wall near Mexico.
It was the Hillary crowd that gave these answers. As always, everything within quotation marks is a real student response, unedited for grammar or spelling.
Here, America, is what young people like about Hillary Clinton...
" I believe in gender and race equality so, I believe that Hillary Clinton has been enforcing them."
"Taxing the upper class more, because they can afford it and the wealthy can get around taxes."
"I don't know any of the policies that Hillary Clinton has proposed, but I do know that she is a Democrat and for me that is a big enough reason to vote for her, if I could."
"The reason why I choose her is more about sympathy. I can't vote here, so I don't pay much attention on either ones."
"She is married to Bill Clinton, so if she needs any help, he can help her."
"A fair tax system would benefit the United States because it would mean equality among the classes. The wealthy, middle class and the poor would pay according to what they are able to. There would be no disagreements among the people."
"One policy I agree with is attempting to equals all social classes"
"health care policy if you cannot afford it, it provides you with health care, there are a lot of places where people could not afford to be taken care of. Yes this is not so good for the other people that could pay for it, not fair, because they end up paying for it, but that's just how it is."
"To be perfectly honest, I'd vote for Gary Johnson, but since that would be a wasted vote since not many people would even pay attention to him, I'd vote for Hillary Clinton instead."
"Exit taxes for national companies that have factories out of the U.S. Since there are so many American companies that move to China, for example, or other countries that have cheaper labor, the exit taxes would be a way to charge these companies."
"The one policy I mostly agree with that Hillary Clinton proposed is probably - if I'm not wrong - fixing the educational system and make tuitons more affordable and decrease the college debt that many students face right after graduating. It was a not so bad idea making the in state tuiton free for the state residents."
"Besides a free energy movement promoting solar, wind and other renewables energy sources, a general assumption that Bill would have direct contact to the source, could improve all policy's set but "free" energy could relieve dependence on foreign energy.
I have a lot of work to do....
Tuesday, August 23, 2016
The following is my August 15, 2016 column in The Dallas Morning News
This month I turned in grades for my summer classes. The moment that task was completed I had officially wrapped up 25 years in America's system of higher education.
During that quarter-century, I have observed countless proposals from Washington, D.C., to the hallways of my institution to make college education more "accessible" for millions of struggling American families. The latest idea —straight out of the Bernie Sanders-created Democratic platform — has Hillary Clinton proposing "free" college tuition for a large swath of America's middle- and lower-income families.
This idea is loaded with several unintended consequences that will make the recipients of this federal gift regret the moment it passed.
1. Her plan would create an artificial increase in the demand for college classes at community colleges and public universities. Community colleges, which are open-enrollment institutions, would be inundated with students seeking seats. This would lead to massive shortages, unless states approve huge budget (and tax) increases to fully fund the expansion of buildings and hiring of new faculty that would have to take place.
Universities, facing a similar demand push, would simply raise the price of admission, meaning higher grade-point averages, SAT and ACT scores would be used to weed out students who have responded to the allure of free tuition. This greater selectivity would put even more pressure on public universities, which already are facing challenges in having a racially and culturally diverse student population.
2. Potentially millions of young people who have no business attending college would waste their time -- and taxpayer dollars -- seeking degrees they will not obtain. It is a simple fact that not everyone is capable of surviving the demands of multitudinous college majors. Free tuition would dupe young people into a sense of belonging, only to find that their work ethic, intelligence and aptitude are not up to the rigors of advanced education.
This brings us to another economic fact: Ill-prepared students who rush off to college could have allocated their time and resources to second-best choices such as internships, vocational training or other certification programs to become skilled workers in fields that are already in critically short supply -- and often pay more than college graduates earn. Clinton's plan only exacerbates those shortages in blue-collar trades by decreasing the available supply of candidates for those programs.
3. Her program also would lead to downward compression on salaries for students who do obtain college degrees. Simply put, if you have an artificial increase in college and university enrollment, you will have an artificial increase in the number of people who eventually receive degrees. Ask yourself what will happen if, say, the supply of humanities or English majors increases? Of course, salaries will have to fall as surpluses emerge in those professions.
Furthermore, possessing a college degree would now be less illustrious in the eyes of many employers (as it already is), and the four-year degree would be less valuable. This would force more students to turn to graduate school -- and more debt since Clinton is not giving that away for free (yet).
4. Then there is the problem facing college educators who would now teach millions of educational welfare recipients. We already see a growing trend toward millennial entitlement thinking. If President Clinton gives these folks free tuition, many of them are going to treat college like they do public high school. Does anyone really want America's colleges and universities to be regarded the same way we regard our high schools?
Free K-12 education is of the same quality as many other free goods -- poor, at best. Paying for college makes people value their education more.
5. Finally, there is the small matter of the United States Constitution. In 1794, James Madison said, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress, of extending on objects of benevolence the money of their constituents."
Since Clinton would have to swear to defend the Constitution, I would like to send her my pocket copy, which provides no measure for taking away taxpayer dollars to pay for the education of college kids. Simply put, our Founders recognized that in order to make tuition free for one person, an act of plunder had to be committed on a taxpayer.
Which leaves me with my recommendation to parents of college-age kids:
Pay for your own creation.
Thursday, June 23, 2016
Today in my classes I reminded my students that they have an exam on July 5th. Mindful of the fact that many of them would rather not have to study supply and demand analysis on July 4th, I made an attempt to make them feel better. I explained how July 4th should be a day of mourning rather than celebration. Mourning for what America could be - and should be - if we would only follow the principles of individual liberty and limited government spelled out in the words of our Declaration of Independence.
I went on to explain that if you look at the trend in property rights, civil liberties, taxes, the social welfare state and government regulations (all issues we have covered in class), America is far from what our Founders meant for it to be and that in reality, we are closer than ever to becoming a land of socialism where fewer and fewer people have anything more than contempt for our founding principles.
To prove the point that July 4th should be called "National Hypocrite's Day" I offered the following challenge:
"As your family and friends prepare to enjoy fireworks on July 4th, stop and ask them if they would mind if you read the Declaration of Independence to them and have a family discussion of that Thomas Jefferson was saying and how his words apply to us today."
I told my students that there is a good chance that their request will be met with protest and if allowed to read it they would look out and see glazed, indifferent expressions, followed by silence as if to say, "Can we just pop the firecrackers now??"
For those of you who do not think a reading of the Declaration of Independence would go over well in your household, let me offer this 15 minute cartoon/ Bernie Sanders monologue instead. Surely you have 15 minutes to share this with your kids.
Enjoy the fireworks.
Thursday, May 12, 2016
What follows is my May 10, 2016 Op-Ed in The Orlando Sentinel
Now that the Republican Party has officially committed suicide by selecting Donald Trump as the new standard bearer of the GOP, it is time for all good Libertarians to come to the aid of our neighbor.
Make no mistake about it: If you are a traditional Goldwater/Reagan conservative, your party is now the one that is associated with xenophobia, racism, religious and ethnic bigotry and blatant sexism. On top of those unflattering but true categorizations, you also belong to a party that is now as economically ignorant as that of left-wing democratic socialism.
Forty-one years ago, Mike Wallace of "60 Minutes" interviewed Republican presidential hopeful Ronald Reagan. In this segment, Reagan told Wallace that the heart of his philosophy was Libertarianism.
Reagan went on to explain that Libertarianism is essentially a belief that human beings are better positioned to make their own decisions without the control or regulation of government.
This means that, on social issues, Libertarians do not believe the state should have any say in who consenting adults marry; should not regulate what adults put into their bodies; and should not interfere with our rights to privacy, speech and other civil matters.
Democrats understand this all too well, and are to be congratulated for pushing for laws that do not restrict the right to marry whom we choose while getting laws passed that decriminalize marijuana use. Moreover, it has been the Democrats who have been most outspoken in fighting the government's surveillance practices against innocent Americans. Meanwhile, Republicans, in their best ostrich-head-in-the-sand impersonation, continue to push for laws that impose their "family values" on all the rest of us.
On economic issues, Libertarians want government out of our wallets as much as we want them out of our bodies and bedrooms.
This is where Republicans traditionally received high marks. After all, it was Reagan who drove the top marginal income tax rate from 70 percent to 28 percent in only five years. It was Reagan who championed welfare reform and fewer job-destroying regulations that helped to fuel the rapid growth of the 1980s. And spare me (in case you are a Democrat reading this) the line that "Reagan caused massive deficits." Government tax collections rose from $599 billion in 1981 to $990 billion by 1989 because of his tax cuts and growth-creating policies.
Reagan also championed amnesty for millions of illegal immigrants and never once announced a policy of not allowing any Soviet or Eastern-bloc residents to enter American until "we can figure this thing out."
Today's Republican Party also fails — miserably — the test of economic literacy.
Donald Trump wants to return the United States to the trade policies of the 1930s while pushing for greater social-welfare spending and immigration laws that would create labor shortages and inflationary pressures in innumerable areas of our economy.
But Trump's bad economics simply follow the policies of both Bush presidencies in which increased regulations, higher income taxes (the first Bush), horrible trade policies (second Bush) and rampant crony capitalism did not give voters much reason to believe that Republicans were good for their economic livelihood.
Those of us who are Libertarians offer today's disaffected Republicans a saner option going forward.
We would say to those who cannot stomach voting for Trump — or Hillary Clinton — that the time has come to realize that, on social issues, the country largely wants no part of 1950s Republican values. Millennials — who now outnumber baby boomers — do not want to hear about morality and certainly do not want the government to define it.
On the economic side of the coin, younger voters are torn between the Libertarian ideology of Ron Paul and the Socialist dogma of Bernie Sanders. In each of the past two election cycles, young people flocked to these candidates.
Now is the time for a smart Republican (no laughing, please) to embrace the Democratic Party on social issues and the traditional Reagan Libertarianism on economic issues in order to turn 2016 into a bad memory.
Or, Republicans can just keep losing elections.
Tuesday, April 19, 2016
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
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.