Patrick Toomey, President for the Club For Growth has written a wonderful piece in IMPRIMIS about the story of how prosperity has grown over the past few decades not just for the United States but world wide. Unfortunately it's a story the most Democrats especially Obama and even some Republicans do not understand and don't care to understand. If Obama is elected our next president he may very well roll back all our gains because he is a tax increase kind of a guy and most likely understands nothing about what bring prosperity to all - FREEDOM that is ECONOMIC FREEDOM which means low taxes for everybody. Please read Toomey's excellent article called “The Greatest Story Never Told”: Today’s Economy in Perspective.
THERE IS a debate going on today over whether our economy is in recession. Polls show sagging public confidence. But some perspective is sorely needed. The fact of the matter is that we in the United States, and to a lesser degree the entire world, have just lived through—and continue to live in—the greatest period of prosperity in human history. Over the last 25 years, more wealth has been created, more people have been lifted out of poverty, standards of living have been elevated more dramatically, and the quality and length of life have improved, more than ever before in recorded history. Unfortunately, as Larry Kudlow says, this is “the greatest story never told.” We need to start telling the story, and also to think about its causes.
First, let us focus on the United States (and I say this with full knowledge that the State of Michigan is a unique exception among the 50 states to America’s extraordinary recent prosperity; but the causes of Michigan’s peculiar problems are a topic for another day): Average economic growth in the U.S. has not only been positive for almost the entire last quarter century, but for much of this period the rate of growth has accelerated. Our nation’s total economic output in 1982 was $5.1 trillion; last year it was $11.3 trillion (in real 2000 dollars). Per capita economic output in 1982 was $22,400; last year it was $37,807 (in real 2000 dollars). The average unemployment rate in the 1970s was nearly seven percent; it has been declining, on average, every decade since, and has remained below five percent since 2003. The service sector of our economy has been on fire, growing from $1 trillion in 1982 to $5.5 trillion in 2006. And do you know how far back one has to go to find the year when America’s total manufacturing output peaked? All the way back to 2007! Yes, U.S. factories produced more last year than in any previous year in our history. That’s the “hollowing out”—as its critics like to say—of America’s economy.
This expanding economy has, of course, resulted in huge gains in wealth. The Dow Jones Industrial Average began the 1980s at 825; today, despite its recent declines, it remains above 12,000, a 1,400 percent increase. And with the democratization of the capital markets that has occurred through savings programs like IRAs and 401(k)s and investment vehicles like mutual funds, the average family’s wealth has grown dramatically, too. In 1983, 19 percent of American households owned stocks; in 2005, 50 percent were investors. In 1989, the median family net worth was $69,000; in 2004, it was $93,000.
These gains in income and wealth have resulted directly in a better standard of living for virtually every segment of American society—including the poor. Among families living below the official poverty line in the early 1970s, less than 40 percent had a car, almost none had color televisions, and air conditioning was virtually unheard of; in 2004, 46 percent owned their own homes, almost 75 percent owned a car (indeed, 30 percent owned two or more cars), 97 percent had color TVs, and 67 percent had air conditioning. The poor in the U.S. have an average of 721 square feet of living space per person, as compared with 430 in Sweden and 92 in Mexico....
...This “greatest story never told” is indeed a tremendous story. It’s the story of the fastest-growing period of prosperity—and the most dramatic mass elevation from poverty—in the history of the world. And it’s all been possible because—bit by bit, in fits and starts, with advances and retreats—the U.S. and other countries have been moving toward greater economic freedom.
In light of this story—which, to repeat, is ongoing, so that you don’t have to go back to medieval or classical times to find the evidence—it is utterly perplexing that so much of the election year rhetoric of late is aimed at reversing our economic course. For instance, it’s hard to find a domestic policy that can be proven to be as successful as the Bush tax cuts—even by presumably Democratic standards. It’s simply a matter of fact that these tax cuts shifted the tax burden substantially to higher income earners and took millions of lower income workers off the tax rolls altogether. The economy took off and ran for at least five years after implementation, and the federal deficit shrank dramatically after the tax cuts were enacted. Yet calls to reverse these tax cuts abound.
For the Democratic Party, of course, there are other reasons for rolling back economic freedom. One is the powerful special interest groups within its coalition—organized labor in particular—which rely on government for special treatment and benefits they could never obtain in free and fair market-based negotiations. Unfortunately, the resulting higher costs and inefficiencies can devastate industries and regions—Michigan being a prime example.
But if we can expect Democrats to resist economic freedom, how do we explain the timidity on the Republican side to defend the economic ideas that have fueled recent advances in prosperity? The answer is that most politicians are ultimately motivated by their perceptions of public opinion. And despite the evidence, the public doesn’t seem to realize the period of unprecedented progress we are in.
As a side note, the increasing lack of opposition among the American people to higher income taxes should not be surprising when an increasingly progressive tax code means ever fewer Americans are paying any taxes at all: In 2005, the top one percent of earners in the U.S. paid 39 percent of all income taxes, while the bottom 50 percent of earners paid just three percent. Over time, if half of the population believes that it is entitled to have someone else pay for government, we should not be surprised if public support for economic freedom continues to erode.
As one who has done a lot of campaigning over the years, I’ll admit, it can be hard to explain to some audiences why they should have to buy their own health insurance when the other side is offering to have the government give it to them for free. But that doesn’t absolve politicians of the moral obligation to present the principled and true argument..
Reprinted by permission from Imprimis, a publication of Hillsdale College.
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