The elephant in ass’s clothing 4

Rule by the Democratic Party is nasty, and where can voters look for relief but to the Republicans?

Because the desperation was strong, too much hope was placed in the Republicans.

Now the disappointment begins. They are starting – so soon! – to copy the Democrats.

And already – of course – the Democrats are gloating.

Catherine Rampell writes in the Washington Post:

Republicans have taken the Senate and expanded their fiefdom in the House, but the Democrats seem to have won the intellectual narrative nonetheless. The GOP, inexplicably, is having its Thomas Piketty moment.

Seriously, guys: Republicans have suddenly started caring about inequality. …

When Republicans have taken note of our country’s income and wealth gaps, the sentiment has usually been dismissive and disdainful, full of accusations of class warfare waged by resentful, lazy people unwilling to hoist themselves up by their bootstraps.

Then, in just the past week, many of the likely 2016 Republican presidential contenders began airing concerns about the poor and condemning the outsize fortunes of the wealthy.

On Fox News after the State of the Union speech, Sen. Ted Cruz (Tex.) denigrated the administration’s economic track record by doing his best Bernie Sanders impression.

“We’re facing right now a divided America when it comes to the economy. It is true that the top 1 percent are doing great under Barack Obama. Today, the top 1 percent earn a higher share of our national income than any year since 1928,” he said, quoting an oft-cited (by liberals) statistic from the work of economists Piketty and Emmanuel Saez.

Likewise, here’s Mitt Romney, in a speech last week: “Under President Obama, the rich have gotten richer, income inequality has gotten worse and there are more people in poverty than ever before.” Sound-bite highlights from his past presidential campaign, you may recall, included a reference to the “47 percent” who don’t pay federal income taxes and a conclusion that “my job is not to worry about those people”.

Apparently his job description has changed.

Jeb Bush, too, has newfound interest in the lower income groups and deep inequity flourishing in our nation. His State of the Union reaction: “While the last eight years have been pretty good ones for top earners, they’ve been a lost decade for the rest of America.” Sen. Rand Paul, as well: “Income inequality has worsened under this administration. And tonight, President Obama offers more of the same policies — policies that have allowed the poor to get poorer and the rich to get richer.”

Someone up the GOP food chain seems to have decided that inequality and poor people now belong in everyone’s talking points, class warfare be damned. But why?

The rest of the article is not worth quoting. Rampell’s answers to her “why?” are unconvincing (you can judge them for yourself here).

What matters is that the Republican Party may not after all be the lesser of two evils. It may simply be the same evil under a different name.

In an open society, the rich are not rich because the poor are poor.

The poor are not poor because the rich are rich.

When Republican politicians encourage that misapprehension, they are encouraging the politics of envy.

As Thomas Sowell says (see our post Listen to Sowell, January 21, 2015), most people are poor when they are young and rich when they are older.

The main cause, in America, of poor people staying poor is that government keeps them so, by keeping them dependent on government.

The best cure for poverty is freedom from government “help”.

The more government “helps” the poor, the more poor people there will be, and the longer they will be trapped in poverty.

We had assumed that Republicans like conservative Ted Cruz and libertarian Rand Paul knew this. Seems we were wrong.

What do bleeding-hearted politicians think the rich do with their money? Keep it in boxes?

No. They invest it, generally in ways that do far more good for the economy than if they give heaps of it to government in taxes. Government uses tax money to pay a vast army of administrators to distribute some it to those they keep on hand-outs. Government wastes money. And higher taxes never did, never can, and never will cure poverty.

It cannot matter how unequal people are in wealth as long as everyone has enough to satisfy their wants. If they don’t have enough, they can do better for themselves in a market economy. Only if they are left free to work for themselves in an uncontrolled economy. Unless they are socialist tyrants, enriching themselves at the people’s expense. 

Poverty is a problem. Wealth is not.

Picking the wrong data 4

Thomas Piketty’s book Capital in the Twenty-First Century (see our review of it, The Savior of Socialism Proves the Worth of Capitalism, under Pages) has been found to contain serious errors by the Financial Times.

Their findings confirm the unfavorable verdict pronounced on the book by both our reviewer Don L and, in comment, by our in-house economist Burro.

We quote from the FT article by Chris Giles:

The data underpinning Professor Piketty’s 577-page tome, which has dominated best-seller lists in recent weeks, contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets …

The central theme of Prof Piketty’s work is that wealth inequalities are heading back up to levels last seen before the first world war. The investigation undercuts this claim, indicating there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the richest few.

Prof Piketty … provides detailed sourcing for his estimates of wealth inequality in Europe and the US over the past 200 years. In his spreadsheets, however, there are transcription errors from the original sources and incorrect formulas. It also appears that some of the data are cherry-picked or constructed without an original source.

Now we see nothing wrong, in any case, with income or wealth inequality. (Piketty confuses the two.) We have observed that, in open societies, wherever the rich are richest, the poor are least poor.

It is the Left that wants economic equality, and wherever it has tried to establish that impossible condition it has not just failed, it has created hell on earth.

The Left swooped on Piketty’s obese compendium of wishes and errors, as a vindication of socialist theory.  (See for example the encomium by the leftist professor Paul Krugman here. He thinks Piketty has made a “masterly diagnosis” in his “superb book”.)

So we hail the FT’s revelations with more than a touch of unapologetic Schadenfreude.

In a comment today under our post The savior of socialism proves the worth of capitalism (May 20, 2014), Burro writes:

A great leap forward has just occurred!

No less than the Financial Times of London has right on it’s front page today, Saturday, an exposé of Pick-your-number’s book and the loony numbers it contains. It then proceeds to demolish most of the Socialist conclusions on page 3. …

[Piketty] has been shown to have attended the “Al Gore” school of statistics, and not only made errors of transcription, ie putting numbers in the wrong place which surprise, surprise was beneficial to HIS thesis but not the opposite, but “the [FT] investigation found numerous mistakes in [his] work: simple fat-finger errors; sub-optimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing; unexplained use of different time periods; and inconsistent uses of source data”. …

Picketty says he is “…happy to change my (ie his) conclusion” should such numbers be incorrect. …

Burro does not believe Piketty will change his conclusion or his mind. He wrote the book because he believes with fixed certainty that socialism is good.

It isn’t.

Posted under Capitalism, Commentary, communism, Economics, Marxism, Socialism by Jillian Becker on Saturday, May 24, 2014

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The “savior of socialism” proves the worth of capitalism 8

Today we post, in our Pages section, a review of Capital in the Twenty-First Century by Thomas Piketty. 

The review, by Don L, is titled:  The “Savior  of Socialism” Proves the Worth of Capitalism. (To go there, click on the title under Pages, at the top of our margin.)

Here is an extract :

Piketty’s Marxian monster is one nonsensical – and previously discarded – economic notion after another. He doesn’t grasp that there is no distribution of income, favorably or negatively, in a Free Market Capitalistic system. All wealth is allocated by consumers … they are kings and queens of an economy and of a truly JUST society. They determine what producer satisfies needs and wants most successfully. It’s consumer meritocracy! Nobody from General Foods ever shows up at the door with a threat of imprisonment if you don’t buy. Further, Piketty holds to the long-ago-tossed idea that capital is homogeneous. Capital is heterogeneous, and it is the putting together, by an entrepreneur, of the right combination of capital to serve consumers’ demands, in an uncertain environment, that determines profit or loss. Remember, an entrepreneur pays wages well in advance of sales revenue. There is absolutely no such thing as a guaranteed or certain rate of return on capital such as Piketty chronically and erroneously incorporates in his formulations. …

Mr Piketty’s book, except for unintentionally proving that government causes income inequality, is worthless, and his endeavor is doomed. Piketty fails to comprehend that inequality arises when government economic intervention distorts free exchange into an unnatural 3-party, buyer-seller-government, lose-lose-win by coercion, framework. He just doesn’t understand that there can never be a sufficiency of data, nor a mathematical model, by which you can emulate the free and willing, person-to-person, win-win interaction of hundreds of millions of people making trillions upon trillions of decisions about what they think is best for themselves as they allocate dollars/wealth through exchange. Governments cannot legislate or impose a false reality.

“Socialism fails because it’s based on the emotion of SHOULD.

Free Market Capitalism succeeds because it’s based on the reality of IS.”

Ludwig von Mises

The author supplies a very useful list of books at the end of the review.

Posted under Capitalism, Commentary, Economics, Socialism by Jillian Becker on Tuesday, May 20, 2014

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