What's Missing in the Inequality Debate

The following is my Op-Ed in the January 26, 2014 Orlando Sentinel

 

In 1795 the United States Supreme Court declared, “The right of acquiring and possessing property, and having it protected, is one of the natural, inherent and inalienable rights of man.  No man would become a member of a community, in which he could not enjoy the fruits of his honest labor and industry.  The preservation of property then is the primary object of the social compact.”

Soon President Obama will deliver his State of the Union Address, which is going to lean heavily on his philosophical disdain for growing income inequality in the United States.  We know he wants to raise the minimum wage to $10.10 per hour.  Last year income and payroll taxes were increased, in part to satisfy his desire for greater revenue for the relief of struggling Americans.  And, of course, he recently stated that to not extend unemployment benefits would be, in his words, “cruel.”

I share the President’s desire to see an increase in the income of poorer and middle income Americans.  No one in the economics community I know of has argued that we need to see falling incomes in order to produce a healthier economy.

Unfortunately, his speech is going to create the impression that income and wealth can be viewed as a ‘zero-sum game’ featuring the idea that if Bill Gates earns one more dollar someone else is $1 poorer.  Yet, rather than acknowledge his economic failures over the past five years we will be told more about how unfair life is for poorer Americans.

This is where the 1795 Supreme Court comes in.

America’s long history has proven that prosperity for all hinges on a healthy respect for, and protection of property rights.

Left alone, every business owner has an inherent desire to earn a profit.  They learn over time that in order to make profit in the long run, they must serve their customers in a way that makes people want to voluntarily engage in commerce with them.  They also know that taking greater risks and seeking expansion opportunities will only take place if it is believed that more profit will follow.  In order to expand – or to exist to begin with – productive employees are necessary.  Hiring and maintaining these employees means offering an income that is commensurate with the marketplace for that particular type of labor.    Paying greater wages and salaries to workers who prove to be the most productive is also rational, inasmuch as losing them to your next best competitor is an ever-present risk.

When a wage is offered, the prospective employee has the right to evaluate the offer, compare it to others and say “yes” or “no”.  The social compact ensures that liberty, rather than force, violence or coercion will keep this system working well for the employer and the employee.

When government steps in and forces employers to pay more than employees productivity and value would warrant, or when government imposes mandatory health care or sick leave benefits, it is tantamount to a taking of the employers property, by force, and the right to voluntary exchange is violated.

This is what is missing from the current income inequality debate.  The right for human beings to free negotiate labor contracts has been taken away.  Private property is being transferred, by force, from employer to employee.  Meanwhile the following unintended consequences unfold.

First, fewer and fewer jobs are available and those who have jobs become convinced that it is government, rather than their own advancements is skill, education and training, that is the source of a better life.  This keeps people locked into dead-end jobs while waiting for the next law to come along forcing employers to do “the right thing.”

Second, rather than take the risks of starting a new business, or expanding an existing one, the men and women who might otherwise have become valuable entrepreneurs and income creators, decide that the risks outweigh the rewards and either relocate, refuse to expand or never open their doors to begin with.

Until President Obama realizes the connection between private property rights and long-run income creation, we will continue to see more laws, more force, more regulations and more income inequality.

 

Has Disney Caved In to Secularism?

Last night my family and I visited Walt Disney World's Candlelight Processional - held at Epcot every year during the holidays.

The Candlelight Processional is a beautiful and moving story told by a celebrity narrator mixed in with wonderful music performed by hundreds of people of all race and ages.

This event is all designed to tell the story of the birth of Jesus and for all of the years we have attended Disney has maintained the same script, music and thematic touches. 

Until this year.

This year the following part of the script was left off:

He was born in an obscure village
The child of a peasant woman
He grew up in another obscure village
Where he worked in a carpenter shop
Until he was thirty

He never wrote a book
He never held an office
He never went to college
He never visited a big city
He never travelled more than two hundred miles
From the place where he was born
He did none of the things
Usually associated with greatness
He had no credentials but himself

He was only thirty three

His friends ran away
One of them denied him
He was turned over to his enemies
And went through the mockery of a trial
He was nailed to a cross between two thieves
While dying, his executioners gambled for his clothing
The only property he had on earth

When he was dead
He was laid in a borrowed grave
Through the pity of a friend
Nineteen centuries have come and gone
And today Jesus is the central figure of the human race
And the leader of mankind's progress
All the armies that have ever marched
All the navies that have ever sailed
All the parliaments that have ever sat
All the kings that ever reigned put together
Have not affected the life of mankind on earth
As powerfully as that one solitary life.

 

I can only speculate as to the reasons Disney decided to eliminate this very powerful and somewhat evangelical message.  After all, I was not in the room when the decision was made and no one from Disney told us to expect anything different for reasons X, Y or Z.

 

All I know is it seems a bit peculiar to change a show about Jesus's birth when its inclusion in all prior years was met with sell-out crowds and standing-room-only audiences. 

 

No where did it ever seem that leaving this part of the script in was causing the demand for Epcot tickets to fall in December.  No where did we ever see protests outside the gates.

 

And no where is where we found the greatest part of the greatest human story ever told.

 

Whatever the reason, Disney owes its customers and answer.  I know I will think twice next year about buying these tickets if Disney has decided to join the legions of Americans who are afraid to pronounce what this season is about.

 

In fact, if not for the birth of Jesus there would be no profit from an untold story because there would be no Christmas.

 

You could also argue that without Jesus there would be no such thing as Capitalism, which has certainly benefited Disney.  After all, capitalism is based on the idea that people should be allowed to use their free will to pursue money in a peaceful way.  Adam Smith - a Christian - and our overwhelmingly Christian Founders gave us the right - and Disney the right - to enjoy what they called "God-given" rights.    Without the teachings of Jesus on the concept of free will and serving others we never get Adam Smith or the Founders because we never rise above kings, emperors and dictators.

 

The least Disney could do is pursue profit with a pure message, rather than a watered-down one that offends fewer people.

 

On that note, Merry Christmas to all of you.

There must be hope, there must be hope, there must....

I am grading final exams today.  December is a bad time to grade exams.  Santa is finalizing his list and the words coming out of my office here at Valencia would cause him to reduce my number of gifts by around 93.28%.  Why?

Here is what I just read from one student, who, by the way, is not much different from her fellow students.

As always, what follows is not edited.

"When Ronald Reagan created the new deal in 1933 he caused americans to have the false hope it was o.k to spend and told the gov. to basically spend with the wind and with the government spending, people spending no one saving no new jobs creating because the lack of self enlightment things seem to get out of wack and that is what stagflation does."

Maybe if Santa reads my blog he will understand why I am losing hope faster than I am aging.

Have a wonderful Christmas.  See you in the New Year unless my students succeed in killing me off.

Dear Pope Francis, Please Shut Up....

It is bad enough living in a nation with an economically-illiterate president constantly espousing nonsensical economic theories, or worse, making his theories the basis for law.

 

Now I have to read in today's paper that Pope Francis, the leader of over a billion Catholics worldwide, has gotten into the act of saying economically moronic things.

 

In a recent speech decrying what he sees as growing economic injustice around the world, Pope Francis said:

 

"Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.  This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.  Meanwhile, the excluded are still waiting."

 

This might be among the most absurd paragraphs in economic history.

 

If Pope Francis wrote this economic garbage on one of my final exam questions he would receive zero points and I would probably use up a box of red pens correcting the absurdity of his "logic."

 

Here are the facts. 

 

First, there is plenty of evidence that so called "trickle-down" economics - the idea that reducing tax and regulatory burdens leads to growth and opportunity from the top down - works beautifully.

 

I would encourage any and all of you (especially you, Russ Kessler) to go back and look at the Mellon tax cuts of the 1920s, the Kennedy tax cuts of the 1960s, Reagan's 1981 and 1986 tax cuts, the Clinton tax cuts of the late 1990s and evidence from Chile, Sweden, Ireland, China, Germany, Canada, and other nations that have adopted the mantra that letting people keep more of their money will boost all income groups, not just the rich.

 

The data on upward mobility of the poor and middle class, productivity gains, the unemployment rate, the rate of infation (which robs the poor more than anything), GDP data and tax collections all proves that when it comes down to the question of where your next dollar should go - in your wallet or to the government - if economic growth, justice and inclusiveness is desired, the best way to go about it is to free those dollars from taxation to begin with.

 

During the 1980s, for example, Reagan reduced the number of tax brackets from fourteen to two and the top rate fell from 70 to 28%.  The result (go get the data, it is free of charge on the Internet) was that all income groups saw a gain in net income and wealth.  Yes, the rich gained at a faster rate than everyone else, but that is called mathematics.  If everyone receives a 30% tax cut, someone making $1 million per year is going to naturally gain more than someone making $20,000 per year.

 

Pope Francis should look at what goes on in nations that do the opposite - like France, Venezuela, most of Western Europe and in recent times, the United States.  Nations that adopt a "trickle-up" philosophy that argues for an expanded welfare state and higher taxes see sluggish to negative economic growth, a growing number of poor people and a shrinking middle class.  This is simple to understand.  If we tax those who are producing the most for our economy, the incentives to shelter income increases and the desire to expand is diminished.  This inevitably impacts people in the middle and the bottom of the economic spectrum more in the form of fewer jobs and lower incomes.  President Obama has never understood this.  That is why FIVE years into his disastrous experiment with "Hope and Change" the only thing we see is declining hope and less change in our pockets.

 

Pope Francis should go talk to a buddy of mine in Chicago who happens to be a rich Catholic. 

 

I met this guy in 1995 when he was in his late 20s.  He grew up in a lower middle income household without his father being around for much of his life.   That would seem to point towards a life where he becomes a victim of society, bad luck and a free market that rewards only those of us who grow up with silver spoons dangling from our mouths.

 

This guy lived in a tiny apartment, worked at a long-hours, low-paying job but kept digging in, working like a man on a mission, moving from city to city, job to job until he finally landed a job, and a career selling high-end medical technology to surgeons.

 

Today he lives in a house that is so big you better have GPS when you wander around in it and is married with two kids living a very upper-middle class or even lower wealthy class life.

 

I wonder what he might think about the Pope's views on what he should have to pay in taxes?  This guy puts in unreal hours starting at the crack of dawn and his Pope thinks more of his money should be stolen so late-sleeping, lazy crackheads in Chicago can have more food stamp funds.

 

Is that justice?  Is that equity?

 

Since when did our concern for the poor become no concern for the working stiffs who keep the poor alive?  Since when did it become a good thing to COVET AND STEAL? 

 

This is what Pope Francis wants.  He wants 20% of the Ten Commandments to be violated in the name of his warped, illiterate view of economic justice.

 

I would suggest that instead of pretending to be some sort of armchair economic expert, the Pope spend more of his time on the other issues that have surfaced in the Catholic Church over the past several years.  If he really cares about justice and the rights of human beings, there is plenty going on in his church to keep him busy without giving us his half-baked socialistic theories that have never helped the poor achieve any measure of progress.

What Barack Obama could learn from John F. Kennedy

Everyone knows that John F. Kennedy was a Democrat.  Everyone knows he is one of the all-time heroes of the Baby-Boomer generation and of liberals in general.

 

What few people know is that in December of 1962 he gave this speech.

 

 

If you have to, watch it again and really focus on his words.  Notice the sharp contrast between his statements and his philosophical beliefs to that of our current President.  Notice whether he makes a contrast between rich and poor, small businesses and corporations or whether he discusses the distribution of income, "the top 1%" or anything else that comes even remotely close to the beliefs of Barack Obama.

 

Before there was Reagan and his view of income taxes, there was John F. Kennedy.  A true statesman and economically literate human being.

 

If you are a Democrat, here is your hero.  It is possible to remain a Democrat, but be an economically intelligent one. 

 

Kennedy was.

Why the NFL may not exist 50 years from now

This evening I watched a two hour special on Frontline (you can watch the show here) that investigated the National Football League and its two-decade battle against various members of the medical community over the issue of head injuries.

 

The program was especially disturbing inasmuch as both of my sons, ages 14 and 13 are football players, along with several of their friends whose families I essentially talked into playing this sport.

 

I do not consider myself to be one of these hysterical parents who wants to save his kids from all of life's dangers.  I played football, had concussions and other injuries and still play pretty rough backyards games to this day.

 

However, it seems we are just at the tip of the iceberg in the question of whether football causes CTE - Chronic Traumatic Encephalopathty.  According to one doctor who has investigated the brain tissue of 46 former NFL players, 45 of them had CTE.  The program also pointed out dead former college and even high school players who had this degenerative disease.

 

Of course, as other doctors pointed out, there are thousands of former NFL players walking around that are not showing signs of depression, rage, memory loss and suicidal thoughts, but nevertheless, the NFL is in trouble.  Big trouble.

 

Starting with the $765 million settlement with former players who sued the NFL, claiming the league had known all along about the effects of concussions on long-run health, the NFL is now facing an even bigger threat than lawyers.

 

Mothers.

 

Already we are seeing more and more parents of talented athletes picking soccer or basketball or other less violent sports.

 

All it is going to take is enough parents who are legitimately scared for their son's well-being to pull the plug on football, to cause the pipeline of college talent to the NFL to dry up over time.

 

Over the next several decades I think we can expect to see fewer and fewer players from better educated families showing up on football fields.  Increasingly, the NFL is going to be filled with players from lower income, less-educated, less concerned families (not that all three of these are connected).  But this may still not be enough of a supply to keep the NFL vibrant over time.

 

Fifty years from now the NFL may be a fringe sport with MMA/Roman gladiator-type participants, with television audiences that are much smaller and much more in love with the gore and brutality that the sport would continue to bring.

 

Unless the NFL changes.

 

Those changes are going to have to center around rule changes, and, if possible, technological changes that have helmet sensors that measure impacts so that players who need to come out of a game can do so without being knocked out cold.

 

In the meantime, I am going to have my sons watch the Frontline show and listen to them explain what they want to do going forward.  If I just tell them, "Until more evidence comes in, you are not playing", I may be robbing them of their dreams in an irrational manner.

 

If a former player and huge NFL fan like me is having these thoughts, I can only imagine what other moms and dads are thinking.

 

The NFL better take notice. 

 

Or else.

Saying Goodbye to the Losers that are the Miami Dolphins

Last night I had the painful duty of explaining to my oldest son, and fellow fan of the Miami Dolphins, that I will no longer support, or cheer for, or watch, or wear the clothing of our team. 

 

This seemingly trivial moment in my relationship with this 14-year old was actually an important moment to teach him a lesson about character, honor and civility.

 

In case you missed it, the Miami Dolphins are in big trouble as an organization - and it has nothing to do with the fact that it has not won a Super Bowl in 40 years and once again sports a losing record.

 

No, it is all because they have losers who are on record engaging in some of the most disgusting abuse of a fellow teammate you will ever read about.

 

Sparing you the gory details, which you can read about anywhere, the Dolphins coaches and players - led by a member of the teams Leadership Council decided to make second-year player, Jonathan Martin the target of racist rants, monetary extortion and threats to his life and the well-being of his mother.

 

The coaches, according to the November 6th edition of The Orlando Sentinel, encouraged offensive guard Richie Incognito to "toughen up" Martin last spring.

 

It seems that Incognito - who has often been named by other NFL players as the dirtiest player in the league - took this charge as an opportunity to render Mr. Martin incapable of continuing to work as a player for the Dolphins. 

 

Martin is now gone, Incognito has been suspended by the Dolphins (who are now in panic-mode as the NFL investigates) and shockingly, Dolphins players are coming to the defense of Incognito as being some sort of enforcer of the code of manliness required of NFL players.

 

You can read the quotes by team stars like Cameron Wake and Mike Wallace for yourself. 

 

You can also read how Dolphins players routinely force younger players to pay for lavish parties and engage in other humiliating endeavors, all for the "rite of passage" the veterans believe should be imposed upon them.

 

As a former football player and sports agent with the National Football League Players Association, I have heard about, and know about, the culture of football lockerrooms. 

 

It is normal for older players to jokingly pick on younger ones for a little while.  Making the rookies sing their school song during lunch, or carry the bags of veterans is pretty common.

 

Threatening to kill a teammate while calling him a "half-n........" is not common.   Endorsing this behavior is also not common - unless you are lacking in character and virtue, which the Dolphins - from ownership down to the players - seemingly are.

 

In 1975 I picked the Miami Dolphins as my favorite team.  For exactly 38 1/2 seasons I have watched the Bob Griese, Larry Csonka and Dan Marino teams play with class.  After Marino left in 2000 I spent the next 11 years watching teams led by players like Jay Fiedler and Chad Pennington lose many more games than they won, but always with no sign that the team was filled with characterless losers.

 

Last year I spent part of August watching HBO's "Hard Knocks" - a documentary about the 2012 Dolphins.  Every night I came in angry, telling my wife and kids that it seemed like the Dolphins had a bunch of undisciplined losers in their ranks, with coaches who did not seem to care about the character of the players.  But still I watched my team through another losing season.

 

In December of last year I had a chance to go to Miami and meet many members of  the 1972 Dolphins.  I also met and talked with the current owner of the team, Stephen Ross.  When I mentioned to him that the Dolphins seemed to not have the same character and leadership of the old Dolphins he said, "Well, winning takes care of a lot of things."   Wrong, Mr. Ross.  Winning games while losing your virtue means nothing.

 

Eight games into this season my instincts have been proven to be correct.  The 2013 Miami Dolphins are losers.  Real losers. 

 

It does not matter than their record is 4-4.  The teams record as men is 0-8. 

 

I told my son that as long as the Dolphins are owned by, coached by and represented by the current group of dishonorable men I will not watch them for one second.

 

I hope he understands that, as Teddy Roosevelt once said, "The one indispensable requisite of an individual, and a nation, is character."

 

As long as the Miami Dolphins have none, they will receive no hypocritical support in my home.