Poland

President Trump began his second foreign trip with a stop in Poland. His speech to the Polish People was broadcast live early this morning, immediately after which Joe Scarborough on MSNBC called it the worst speech ever given by a President on foreign soil.

I didn’t get the same impression. A few key points from the speech.

On terrorism:

“We must stand united against these shared enemies to strip them of their territory and their funding, and their networks, and any form of ideological support that they may have. While we will always welcome new citizens who share our values and love our people, our borders will always be closed to terrorism and extremism of any kind.”

On Russian aggression:

“We urge Russia to cease its destabilizing activities in Ukraine and elsewhere, and its support for hostile regimes — including Syria and Iran — and to instead join the community of responsible nations in our fight against common enemies and in defense of civilization itself.”

On capitalism:

“Finally, on both sides of the Atlantic, our citizens are confronted by yet another danger — one firmly within our control. This danger is invisible to some but familiar to the Poles: the steady creep of government bureaucracy that drains the vitality and wealth of the people. The West became great not because of paperwork and regulations but because people were allowed to chase their dreams and pursue their destinies.”

And on NATO:

“To those who would criticize our tough stance, I would point out that the United States has demonstrated not merely with words but with its actions that we stand firmly behind Article 5, the mutual defense commitment.”

He’s sending the right message.

Tomorrow is a big day. G20 Summit and a meeting with Putin. Look for discussion about North Korea.

-John Anchor
@JohnAnchorBLOG

Paris Climate Agreement

There is a lingering question following President Trump’s meeting with European leaders last week whether or not the United States will fulfill President Obama’s commitment to the Paris Climate Agreement.

Drafted in 2015, the Paris document calls for a reduction of the global temperature increase and was signed by 195 countries, 147 of which have ratified the treaty.

The document is based on “the need for an effective and progressive response to the urgent threat of climate change on the basis of the best available scientific knowledge.”

It’s worth noting, as I did in this space, that such specific urgencies have been predicted – falsely – since the 1970s.

In addition, the document notes “the importance…of the concept of ‘climate justice’, when taking action to address climate change.”

If you are not familiar with the concept of climate justice, the Mary Robinson Foundation defines it this way:

“Those who have benefited…from emissions in the form of on-going economic development and increased wealth…have an ethical obligation to share benefits with those who are today suffering from the effects of these emissions, mainly vulnerable people in developing countries.”

Expressed another way, climate justice is an attack on capitalism and an attack on the United States. Peacefuluprising.org puts it like this:

“The current system consolidates wealth in the hands of a corporate minority, while threatening the health and security of all people…To feed the US growth machine, once agricultural self-reliant economies are decimated…forcing many to migrate from their home. Some of these ‘corporate refugees’ come to the US looking for a better future for their children. And yet, when the economy tanks, our leaders pave the way for these migrants to be scapegoated and blamed for ‘stealing people’s jobs.’ Such scapegoating  directed at the most impacted and vulnerable communities, will continue unless we tackle the root causes of climate change, by re-evaluating our current system and challenging leaders who lack the political courage and integrity to do the same.”

The current system climate justice advocates apparently feel needs to be reevaluated is the free enterprise democratic capitalist society that has given the world so many benefits.

Consider the statistics: At the beginning of the industrial revolution, the percentage of the world population living in poverty was 94%. Because of capitalism, by which new technologies, new companies, and new jobs can be created and developed, that number had dropped to 51% by 1992. As of 2011, global population in poverty was only 17%.

However, Article 9 of the Paris Agreement calls for climate justice financial payments to be made to developing countries: “Developed country Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention…As part of a global effort, developed country Parties should continue to take the lead in mobilizing climate finance from a wide variety of sources, instruments and channels…”

Moreover, the United States is required to regularly report our progress in making payments to developing countries as part of this climate justice initiative. More from Article 9:

“Developed country Parties shall biennially communicate indicative quantitative and qualitative information related to paragraphs 1 and 3 of this Article, as applicable, including, as available, projected levels of public financial resources to be provided to developing country Parties.”

The Paris Climate Agreement is as much an attack on capitalism as it as an attempt to reverse climate change.

The Agreement commits “developed” countries (read: United States) to financially compensate “developing” countries for all of the harm we have caused them due to climate change.

Nevermind the benefits the United States’ free enterprise economy has given to the world over the years in helping to reduce poverty. It’s no wonder so many countries have signed on to this Agreement. The document requires the U.S. to pay them.

President Trump should withdraw the United States from the Paris Agreement immediately.

-John Anchor
@JohnAnchorBLOG

Mark Zuckerberg

Facebook founder and CEO Mark Zuckerberg gave a commencement address at Harvard last week in which he proposed the following:

“Every generation expands its definition of equality. Now it’s time for our generation to define a new social contract. We should have a society that measures progress not by economic metrics like GDP but by how many of us have a role we find meaningful. We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”

So let’s explore…

Universal basic income would, by definition, involve some form of wealth redistribution. The government doesn’t have money to give away. Every dollar it has was made somewhere in the private sector and paid to the government in the form of taxes.

Sure, the government prints money, but it’s not an indefinite supply.

(Increasing the money supply has consequences like runaway inflation and reduced value of the dollar versus other currencies. It’s not somewhere we want to go.)

So universal basic income would mean the federal government would redistribute tax dollars to the whole population.

This is the opposite of Capitalism.

This is the opposite of what made Mr. Zuckerberg rich.

This is the opposite of the system that made the United States of America the economic superpower it has become. One country carries a fourth of the world’s gross product, and it’s us.

So why won’t this work?

Because incentives matter.

Mr. Zuckerberg’s argument: Universal basic income would give everyone a cushion to try new ideas. He said he was able to take a chance with Facebook because he knew he had something on which he could fall back.

As great as that sounds, it’s a utopian dream. It’s not realistic. It’s not how the real world works.

The truth is that the United States is successful because capitalism gives its participants the incentive to keep the fruits of their hard work.

Universal basic income provides no such incentive.

History repeats itself. We’ve been through this. Centuries ago. See the story of Thanksgiving as told through the journal of William Bradford.

Initially, the community set up by the Pilgrims was socialistic in nature: common garden, everyone is allowed to take as much corn as they needed.

Bradford wrote: “For this community was found to breed much confusion and discontent, and retard much employment that would have been to their benefit and comfort, for young men that were most able and fit for labor and service did repine that they should spend their time and strength to work for other men’s wives and children without any recompense…”

Then they changed. Instead of a community garden, they divided the land. They said each family can keep as much corn as they could grow themselves. They provided incentive.

Bradford wrote about the difference in his journal: “This had very good success. For it made all hands industrious, so as much more corn was planted than otherwise would have been.”

Through Capitalism, the Pilgrim community produced more corn than they were able to eat themselves. They sold, or traded, the excess.

This is exactly why the United States economy has been so successful over the years. It’s because Capitalism, when allowed to properly function, works!

It’s not perfect, but it’s better than anything else out there. Rather than providing universal income, we should the system.

-John Anchor
@JohnAnchorBLOG

Ben Carson

A story was in the news yesterday that reveals a lot about what we, as a nation, think about the topic of personal responsibility.

Housing and Urban Development Secretary Dr. Ben Carson said this:

“I think poverty to a large extent is also a state of mind. You take somebody that has the right mindset, you can take everything from them and put them on the street, and I guarantee in a little while they’ll be right back up there. You take somebody with the wrong mindset, you can give them everything in the world — they’ll work their way right back down to the bottom.”

When I heard those words, spoken by a man who grew up in poverty and went on to become one of the world’s leading neurosurgeons, I heard words of encouragement speaking to how far a good attitude, hard work, and personal responsibility will take you in life.

The rest of the media, apparently, heard something different.  Here are a few of the criticisms:

New York Daily News – “Ben Carson somehow reaches new levels of stupidity with latest commentary on poor”

CNN – “Secretary Carson, you should know better” 

Charles Blow – “Can we take Ben Carson back to the vendor and get a refund? Something is broken…”

George Takei – “Ben Carson says that poverty is a “state of mind.” You know what else is a state of mind? Always being a blithering idiot.”

Despite the criticisms, what Dr. Carson said is true.  Americans can rescue themselves out of poverty.  They do it all the time according to statistics.

“By age 60, 53% of Americans will have experienced at least one year in the top 10th income percentile, while 54% of Americans will experience at least one year of poverty by the same age.”

Our economic classes have a fluidity about them that critics don’t acknowledge. That’s not to say it isn’t more difficult to escape if you are born into poverty. It is to say that escaping poverty happens frequently.

One criticism called Dr. Carson’s statement “a convenient, intellectually lazy argument.”  An argument can be made that it is actually the other way around. Riding the assumption of perpetual dependence is akin to saying,”Vote for me! I’ll take care of you! The other party doesn’t care about you!”

Criticizing Dr. Carson because of his words is a politically convenient argument.  We shouldn’t stand for it.

-John Anchor

@JohnAnchorBLOG

What Do You Love About America?

What do you love about America?

Have you thought about it?

Freedom?

Capitalism?

The American Dream? The ability to make of your life whatever you choose?

Ted Nugent this morning on Fox & Friends called America “this sacred experiment in self-government.”

That’s really what it is! In the history of the world, the concept of self-governance is a young, novel idea, but our Founders put a system in place that works, provided of course, as Ben Franklin once said, we can keep it.

President Reagan famously proclaimed, “Freedom is never more than one generation away from extinction.”

Think about the importance of that statement in light of current events:

Many Americans think President Trump is a fascist who is going to oppress us all.

Many, albeit an altogether different group of Americans, believe President Obama is a socialist (or communist) who would have us living like the Venezuelans.

And while those examples are extreme, we do have a real threat to our system of governance.

One of our most popular politicians is an unapologetic socialist. The Washington Post reported recently on a “Harvard University survey, which polled young adults between ages 18 and 29, found that 51 percent of respondents do not support capitalism. Just 42 percent said they support it.”

That’s a discouraging statistic, and a disdain for capitalism is a view that history does not support.

Look at the facts. Because of democratic capitalism, the United States’ economy has become a world superpower. Our $18 trillion gross domestic product makes up one-fourth of the gross world product.

We didn’t get there from socialist policies.

President Reagan often referred to America as a shining city on a hill. What makes America exceptional is our system of governance. We must trust it.

-John Anchor
@JohnAnchorBLOG

Class Warfare and the War on Poverty

“The rich aren’t paying their fair share!”

Class warfare division tactics are a frequent part of the political playbook.  The question that politicians and pundits seem unwilling to answer regards what tax percentage specifically makes up a fair share. (We’ve discussed it previously here.)

As far as the tactic of division goes, several points deserve to be made. The politicians who claim to be for reducing poverty through social programs need to be held accountable to the history of this practice. 

Let’s review. 

The greatest attempt and most dollars spent on poverty reduction was initiated through President Johnson’s “War on Poverty”.  Since 1965, the United States has spent over $22 trillion on social programs to fight poverty. (This is three times more than spent on all U.S. military wars since the American Revolution, inflation adjusted, and does not include Social Security or Medicaid.)

Has it worked?

Prior to the War on Poverty, the poverty rate was falling dramatically. From 32.2% in 1950 to 17.3% in 1965.  After the War on Poverty was initiated in 1965, the poverty rate basically flat-lined and has been around 15% ever since. 

It should be noted that the definition of the poverty classification has changed over the years. Those living in poverty today enjoy much improved living conditions over those meeting the poverty definition in decades past.  As our economy has grown, everyone, including those at the poverty level, have benefited. 

The best help for the poor is the job creation that comes through growth of a free market economy. Economic growth is often stimulated by tax cuts and regulatory reform. (For the 20th century economic effects on income tax reform, see here.)

Yet, so often we’re told that the rich are getting richer at the expense of the poor.  This implies that the only way for the poor to improve their circumstances is to take money away from the rich – otherwise known as income redistribution. 

A free market capitalist economy does not work this way. To use the pie analogy, everyone benefits when the size of the pie increases. To focus only on redistributing pie slices does not grow the size of the pie – and often shrinks it.  (See Venezuela.)

Look at the policies of the Obama Administration as an example.  The United States economy has grown at only an average of 2.1% since 2009, making it one of the slowest economic recoveries following a recession in United States history.

Why is that?

Let me suggest that a key reason is because the policies in place during the Obama presidency discouraged hiring. 

The Affordable Care Act incentivized small businesses to remain under fifty employees to avoid the employer mandate.  Many laid off employees to reach this number.

In the energy sector, stringent environmental regulations made it more expensive to do business.  This affected staffing levels.

The Heritage Foundation reported: “In its first six years the Obama Administration…imposed 194 major regulations on the private sector. That figure is more than twice the number imposed by the Bush Administration in its first six years.”

The high regulatory environment and slow economic growth during the Obama years is not a coincidence. The tax cuts and subsequent economic expansion during the Reagan years also is no coincidence.  They both should serve as a reminder of the importance of a free market economy and its benefit on citizens of all economic levels.

-John Anchor

Follow us on Twitter @JohnAnchorBLOG

References:

War on Poverty

http://www.heritage.org/poverty-and-inequality/report/the-war-poverty-after-50-years

Obama Recovery

http://www.cnsnews.com/news/article/terence-p-jeffrey/us-has-record-10th-straight-year-without-3-growth-gdp

Obama Small Business Report Card

https://www.washingtonpost.com/news/on-small-business/wp/2015/11/16/gene-marks-president-obamas-small-business-scorecard/?utm_term=.de75bf1b34e7

High Level Healthcare Analysis

Free Market Solution

Free market capitalism is the most successful economic system in the history of the world. It has raised millions out of poverty and made the United States an economic and political superpower. Any solution to the healthcare “crisis” must be grounded in free market principles. 

Car Insurance 

Many analysts have made the point that the government requiring an individual to purchase health insurance is no different than requiring a driver to purchase auto insurance. This argument is commonly made in favor of the Affordable Care Act, and not entirely without holes, but let’s take a closer look at the comparison. I think you will find there are many aspects of the car insurance industry that could be applied to a reasonable healthcare solution. 

As noted by John Hayward, with car insurance: “…the buyer pays a modest amount, on a steady basis, to purchase financial protection against unanticipated, catastrophic expense. This protection is very affordable for safe drivers, because the insurance companies are permitted to measure risk against reward, and charge lower premiums for those deemed less likely to make expensive claims.”

Sounds reasonable, right?  Free market. 

Mr. Hayward goes on: “A wide range of options is offered to the buyer of an auto insurance policy, who is invited to shop around between many different providers to get the best deal.  The buyer can accept higher levels of financial risk – larger deductibles, lower maximum payouts, and less comprehensive coverage – in exchange for lower premiums.”

To carry the car insurance analogy forward, a healthcare solution should be based on these free market principles. 

To this end, we should detach health insurance from employers and allow individuals to purchase policies across state lines. In the current employer based system, the employee’s premium is not paid out of pocket, resulting in most employees being unaware of the actual costs of their medical treatments. For the same reason, medical providers have little incentive to avoid prescribing costly services, knowing the patient isn’t the one bearing the brunt of the expense. 

In addition, some level of tort reform should be considered. In the current system, it is easy for patients to sue for malpractice, thereby giving doctors incentive to prescribe an over abundance of medical tests purely for precautionary reasons and resulting in increased medical bills to their patients who, remember, don’t see the actual costs anyway. 

So much simply comes down to incentives: for patients to seek cost efficient care and for doctors to provide the same.  And remember, this is America. Freedom is always the best solution. 

-John Anchor

Follow us on Twitter @JohnAnchorBLOG

References:

Car Insurance Comparison 

http://humanevents.com/2012/07/06/car-insurance-vs-health-insurance/

Medical Costs

http://www.heritage.org/social-security/report/assuring-affordable-health-care-all-americans

Economic Class Fluidity

Class warfare and income inequality are staples of certain political platforms. 

President Obama once said: “The folks in the middle and at the bottom haven’t seen wage or income growth, not just over the last three, four years, but over the last 15 years.”

What often goes unsaid is that economic classes within the American free market economy are fluid. Not only are citizens not condemned to remaining in the middle or the bottom, but statistics “suggest high mobility associated with top-level income”.

According to the study and article linked below:

“By age 60, 69.8 percent of the population will have experienced at least one year within the top 20th (income) percentile, 53.1 percent will have experienced at least one year within the top 10th percentile, 36.4 percent will have encountered one year within the top 5th percentile, and 11.1 percent will have experienced one year within the top 1st percentile.”

“Rather than static groups that experience continual high levels of income attainment, there would appear to be more fluid movement into and out of these income levels.”

“While 11.1 percent of the population will experience at least one year of income in the top 1st percentile, only 2.2 percent will do so in 5 or more years spread out across the 25 to 60 age interval, and 1.1 percent will do so in 10 or more years.”

Did you catch that? Only one percent of the population will be in the top 1st percentile of income earners in ten or more years between the ages of 25 to 60. 

This is a benefit free market capitalism offers that socialism does not. It’s how the American Dream becomes a reality for so many willing to work hard and take risks. 

Equally, the same mobility is evident at the lower income percentiles as well. By age 60, 53% of Americans will have experienced at least one year in the top 10th income percentile, while “54% of Americans will experience at least one year of poverty by the same age.”

Remember this next time someone makes an income inequality statement. The possibilities are endless if we level the playing field, let the market work, and take risks and work hard ourselves. 

-John Anchor

Follow us on Twitter @JohnAnchorBLOG

References:

Fortune 

http://fortune.com/2015/03/02/economic-inequality-myth-1-percent-wealth/

Statistics

http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0116370

President Obama

http://money.cnn.com/2013/09/15/news/economy/income-inequality-obama/

The Morality of Capitalism

From the Washington Post:

“(A recent) Harvard University survey, which polled young adults between ages 18 and 29, found that 51 percent of respondents do not support capitalism. Just 42 percent said they support it.”

That is a scary statistic. 

Capitalism is what makes the American Dream a reality for so many hard working individuals. It is what has made America a force for good in the world. 

Consider the words of John Mackey, Whole Foods co-founder, from the source linked below:

“…capitalism and business are the greatest forces for good in the world. It’s been that way for at least the last three hundred years . . . and they don’t get sufficient credit for the amazing value that they have created.”

“(Capitalism is) voluntary exchange for mutual benefit…Capitalism is ultimately people cooperating together to create value for other people, as well as for themselves.”

“Every profession has a purpose beyond maximizing profits.”

“Profit is essential in order to better fulfill your purpose…Without profits, you wouldn’t be very effective…your impact would be limited.”

“Creating profits provides the capital that our world needs to innovate and progress—no profits, then no progress. They are completely interdependent.”

“So does (capitalism) increase inequality? I suppose it’s not so much that capitalism creates inequality, as it helps people to become more prosperous, and inevitably that means that not everybody is going to rise at the same rate, but everybody ultimately rises over time…Capitalism enables people to escape from poverty and become more prosperous and wealthy and that is very good. That’s the issue that we should focus on.”

“Everyone in society is a beneficiary (from capitalism). It is what has lifted much of humanity out of poverty.”

The millennials polled in the Harvard study may have formed their opinions from events they have seen in their lifetimes, such as the financial crisis, recession, and sluggish growth throughout the Obama Administration. 

But that doesn’t make the system wrong. To function properly, we must have laws enforced fairly across the board. In other words, a level playing field. Yet, at the same time, the process must be free from hampering regulations. 

There will be ups and downs, but our economic system is not the problem. It’s the solution – when allowed to operate as intended. 

Consider the statistics:

At the beginning of the industrial revolution, the percentage of the world population living in poverty was 94%. Because of capitalism, by which new technologies, new companies, and new jobs can be created and developed, that number had dropped to 51% by 1992. As of 2011, global population in poverty was only 17%. 

A rising tide lifts all boats…

-JohnAnchor

Follow us on Twitter @JohnAnchorBLOG

References:

Harvard University Poll

https://www.washingtonpost.com/news/wonk/wp/2016/04/26/a-majority-of-millennials-now-reject-capitalism-poll-shows/?utm_term=.9310f86fb079

John Mackey

https://www.atlasnetwork.org/assets/uploads/misc/The-Morality-of-Capitalism-PDF.pdf

Poverty Statistics

http://www.washingtonexaminer.com/amazing-chart-shows-thanks-to-capitalism-global-poverty-is-at-its-lowest-rate-in-history/article/2562224#!