Columnist.
Dr. Thomas Sowell's "'Trickle Down Theory' and 'Tax Cuts for the Rich'" has just been published by the Hoover Institution. Having read this short paper, the conclusion you must reach is that the term "trickle down theory" is simply a tool of charlatans and political hustlers. Sowell states that "no such theory has been found in even the most voluminous and learned histories of economic theories." That's from a scholar who has published extensively in the history of economic thought. Several years ago, Sowell, in his syndicated column, challenged anyone to name an economist from any economic school of thought who had actually advocated a "trickle down" theory. To date, no one has quoted any economist who ever advocated such a theory. Trickle down is a nonexistent theory. Those who use it simply argue against a caricature rather than confront an argument actually made.
Here's a question: If there's a disaster, a war, a severe drought or some other calamity that restricts future supplies of a commodity -- such as oil, coffee or corn -- what is the intelligent thing for people to do right away? If you said "use less now and try to produce more," you'd be absolutely correct. That's not rocket science, but understanding the machinery involved in getting people to do so is a bit more challenging. The best way to get people to use less and produce more is to allow prices to rise. For example, say a Middle East conflict restricts oil supplies and causes prices to rise. The effect of higher prices for oil is that it gives individuals incentive to eliminate or reduce the low-valued uses of oil. For example, a low-valued use of oil is for homeowners to allow the heat that it generates to seep through walls and leaky windows. Higher oil prices create incentives to homeowners to install insulation. Higher gasoline prices force motorists to economize by taking measures such as carpooling and taking fewer low-valued trips.
Many of the nation's colleges and universities have become cesspools of indoctrination, intolerance, academic dishonesty and an "enlightened" form of racism. This is a decades-old trend. In a 1991 speech, Yale President Benno Schmidt warned: "The most serious problems of freedom of expression in our society today exist on our campuses. The assumption seems to be that the purpose of education is to induce correct opinion rather than to search for wisdom and to liberate the mind." Unfortunately, parents, taxpayers and donors have little knowledge of the extent of the dishonesty and indoctrination. There are several clues for telling whether there's academic dishonesty and indoctrination. One is to see whether a college spends millions for diversity and multiculturalism centers and hires directors of diversity and inclusion, managers of diversity recruitment, associate deans for diversity, and vice presidents of diversity. See whether colleges spend money to indoctrinate incoming freshmen with programs such as "The Tunnel of Oppression," in which, among other things, students call one another vile racial and sexual names in order to develop "oppression awareness."
Within the past decade, I've written columns titled "Deception 101," "Stubborn Ignorance" and "Exploiting Public Ignorance," all explaining which branch of the federal government has taxing and spending authority. So here it is again: The first clause of Article 1, Section 7 of the U.S. Constitution, generally known as the "origination clause," reads: "All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills." Constitutionally and by precedent, the House of Representatives has the exclusive prerogative to originate bills to appropriate money, as well as to raise revenues. The president is constitutionally permitted to propose tax and spending measures or veto them. Congress has the authority to ignore the president's proposals and override his vetoes.
Let's pretend that we have the political guts to expand economic opportunities for people at the lower end of the economic spectrum. What vested interests should be attacked, and what economic regulations should be targeted for elimination? It doesn't take a lot of money to become a taxi owner-operator and earn more than $40,000 a year. One needs a car, an insurance policy and ancillary interior equipment to make a car a taxi. In New York City, to be a taxi owner you'd have to purchase a license -- called a medallion -- that in June 2012 cost $704,000. New York's Taxi and Limousine Commission restrictions that generate such a license price outlaw taxi ownership by people who don't have access to a $704,000 loan. By contrast, in Washington, D.C., the annual fee for a license to own a taxi is $125. I'll let you guess which city has more taxis per capita, cheaper fares and more black taxi ownership.
If you listen to America's political hacks, mainstream media talking heads and their socialist allies, you can't help but reach the conclusion that the nation's tax burden is borne by the poor and middleclass while the rich get off scot-free. Stephen Moore, senior economics writer for The Wall Street Journal, and I'm proud to say former GMU economics student, wrote "The U.S. Tax System: Who Really Pays?" in the Manhattan Institute's Issue 2012 (8/12). Let's see whether the rich are paying their "fair" share. According to IRS 2007 data, the richest 1 percent of Americans earned 22 percent of national personal income but paid 40 percent of all personal income taxes. The top 5 percent earned 37 percent and paid 61 percent of personal income tax. The top 10 percent earned 48 percent and paid 71 percent of all personal income taxes. The bottom 50 percent earned 12 percent of personal income but paid just 3 percent of income tax revenues.
If I were a Klansman, wanting to sabotage black education, I couldn't find better allies than education establishment liberals and officials in the Obama administration, especially Secretary of Education Arne Duncan, who in March 2010 announced that his department was "going to reinvigorate civil rights enforcement." For Duncan, the civil rights issue was that black elementary and high school students are disciplined at a higher rate than whites. His evidence for discrimination is that blacks are three and a half times more likely to be suspended or expelled than their white peers. Duncan and his Obama administration supporters conveniently ignored school "racial discrimination" against whites, who are more than two times as likely to be suspended as Asians and Pacific Islanders.
President Barack Obama recently wrote an executive order that established a White House initiative on educational excellence for black Americans that will be housed in the Department of Education. It proposes "to identify evidence-based best practices" to improve black achievement in school and college. Though black education is in desperate straits, the president's executive order will accomplish absolutely nothing to improve black education. The reason is that it does not address the root causes of educational rot among black Americans. It's not rocket science; let's look at it.
In Europe, especially in Germany, hoisting a swastika-emblazoned Nazi flag is a crime. For decades after World War II, people have hunted down and sought punishment for Nazi murderers, who were responsible for the deaths of more than 20 million people. Here's my question: Why are the horrors of Nazism so well-known and widely condemned but not those of socialism and communism? What goes untaught -- and possibly is covered up -- is that socialist and communist ideas have produced the greatest evil in mankind's history. You say, "Williams, what in the world are you talking about? Socialists, communists and their fellow travelers, such as the Wall Street occupiers supported by our president, care about the little guy in his struggle for a fair shake! They're trying to promote social justice." Let's look at some of the history of socialism and communism.
Having been born in 1936 has allowed me to witness both societal progress and retrogression. High on the list of things made better in our society are the great gains in civil liberties and economic opportunities, especially for racial minorities and women. People who are now deemed poor have a level of material wealth that would have been a pipe dream to yesteryear's poor. But despite the fact that today's Americans have achieved an unprecedented level of prosperity, we have become spiritually and morally impoverished compared with our ancestors. Years ago, spending beyond one's means was considered a character defect. Today not only do people spend beyond their means but also there are companies that advertise on radio and TV to eliminate or reduce your credit card and mortgage debt. Students saddled with college loans have called for student loan forgiveness. Yesterday's Americans would have viewed it as morally corrupt and reprehensible to accumulate debt and then seek to avoid paying it. It's nothing less than theft. What's worse is there's little condemnation of it by the rest of us.
Academic intelligentsia, their media, government and corporate enthusiasts worship at the altar of diversity. Despite budget squeezes, universities have created diversity positions, such as director of diversity and inclusion, manager of diversity recruitment, associate dean for diversity, vice president of diversity and perhaps minister of diversity. This is all part of a quest to get college campuses, corporate offices and government agencies to "look like America." For them, part of looking like America means race proportionality. For example, if blacks are 13 percent of the population, they should be 13 percent of college students and professors, corporate managers and government employees. Law professors, courts and social scientists have long held that gross statistical disparities are evidence of a pattern and practice of discrimination. Behind this vision is the stupid notion that but for the fact of discrimination, we'd be distributed proportionately by race across incomes, education, occupations and other outcomes. There's no evidence from anywhere on earth or any time in human history that shows that but for discrimination, there would be proportional representation and an absence of gross statistical disparities, by race, sex, height or any other human characteristic. Nonetheless, much of our thinking, legislation and public policy is based upon proportionality being the norm. Let's run a few gross disparities by you, and you decide whether they represent what the courts call a pattern and practice of discrimination and, if so, what corrective action you would propose.
The agendas of liberals, progressives and assorted tyrants desperately depend on the aspects of human nature they often condemn, such as acquisitiveness, profit motive, self-interestedness and greed. This crossed my mind while reading "How Departures From Economic Freedom Can Affect Freedom In General," by Dr. John Taylor, a Hoover Institution scholar. Taylor tells how former Wells Fargo CEO Dick Kovacevich was forced to take Troubled Asset Relief Program funds even though Wells Fargo did not need or want the funds. Kovacevich was threatened that if he did not accept TARP money, regulators would declare his bank capital-deficient even though Wells Fargo had a triple-A rating. At the time, October 2008, Wells Fargo was in the process of acquiring Wachovia, and to be declared capital-deficient would have killed the deal. U.S. Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke could rely on acquisitiveness, profit motive and self-interestedness to bully Wells Fargo into accepting TARP money. They also knew that Wells Fargo's competitors would go after Wachovia. If all sound banks had refused TARP money, Paulson and Bernanke's tyrannical threats would have failed.
One of the more difficult lessons to teach economics neophytes -- and, many times, trained economists -- is that economic theory cannot say anything definitive about subjective statements, such as what's better, good, bad or worse. Let's try a few examples to make the point. Cabernet sauvignon wine is better than fume blanc. Turkey is better than pork. Matter in the solid state is better than the plasma state. Each of those statements begs the question: Where's the proof? With subjective statements such as those, disagreements can go on forever. It's simply a matter of personal opinion. One person's opinion of what's better or worse is just as good as another's.
Anthony Daniels, who writes under the pen name Theodore Dalrymple, is a retired prison doctor and psychiatrist who tells of his experiences with his patients in "Life at the Bottom." It's an insightful book of essays about the self-destructive behavior and attitudes of the underclass. In one essay, "We Don't Want No Education," reprinted by City Journal (http://www.city-journal.org/html/5_1_oh_to_be.html), Dalrymple says that he cannot recall meeting a 16-year-old from the public housing project near his hospital who could perform simple multiplication operations, such as nine times seven. One 17-year-old told him, "We didn't get that far." This was after 12 years of attending school. One of Dalrymple's patients took a drug overdose because of constant bullying from classmates. "She was stupid because she was clever." What her peers meant by that was anyone who worked hard and performed well at school was wasting his time when truancy and wandering downtown were deemed preferable. The underlying threat was: If you don't mend your ways and join us, we'll beat you up.
In President Barack Obama's 2012 State of the Union address, he said that "higher education can't be a luxury. It is an economic imperative that every family in America should be able to afford." Such talk makes for political points, but there's no evidence that a college education is an economic imperative. A good part of our higher education problem, explaining its spiraling cost, is that a large percentage of students currently attending college are ill-equipped and incapable of doing real college work. They shouldn't be there wasting their own resources and those of their families and taxpayers. Let's look at it. Robert Samuelson, in his Washington Post article "It's time to drop the college-for-all crusade" (5/27/2012), said that "the college-for-all crusade has outlived its usefulness. Time to ditch it. Like the crusade to make all Americans homeowners, it's now doing more harm than good." Richard Vedder -- professor of economics at Ohio University, adjunct scholar at the American Enterprise Institute and director of The Center for College Affordability & Productivity, or CCAP -- in his article "Ditch ... the College-for-All Crusade," published on The Chronicle of Higher Education's blog, "Innovations" (6/7/2012), points out that the "U.S. Labor Department says the majority of new American jobs over the next decade do not need a college degree. We have a six-digit number of college-educated janitors in the U.S." Another CCAP essay by Vedder and his colleagues, titled "From Wall Street to Wal-Mart," reports that there are "one-third of a million waiters and waitresses with college degrees." More than one-third of currently working college graduates are in jobs that do not require a degree, such as flight attendants, taxi drivers and salesmen. Was college attendance a wise use of these students' time and the resources of their parents and taxpayers?
Back in 2009, U.S. Attorney General Eric Holder said we were "a nation of cowards" on matters of race. Permit me to be brave and run a few assertions by you just to see whether we're on the same page. There should be two standards for civilized conduct: one for whites, which is higher, and another for blacks, which is lower. In other words, in the name of justice and fair play, blacks should not be held accountable to the same standards that whites are and should not be criticized for conduct that we'd deem disgusting and racist if said or done by whites. You say, "Williams, what in the world are you talking about?" Mitt Romney hasn't revealed all of his fall campaign strategy yet, but what if he launched a "White Americans for Romney" movement in an effort to get out the white vote? If the Romney campaign did that, there'd be a media-led outcry across the land, with charges ranging from racial insensitivity to outright racism. When President Barack Obama announced his 2012 launch of "African Americans for Obama", the silence was deafening. Should the same standards be applied to Obama as would be applied to Romney? The answer turns out to be no, because Obama is not held to the same standards as Romney.
Some of the responses to my column last week, titled "Immoral Beyond Redemption," prove that Americans have been hoodwinked by Congress. Some readers protested my counting Social Security among government handout programs that can be described as Congress' taking what belongs to one American and giving to another, to whom it doesn't belong -- legalized theft. They argued that they worked for 45 years and paid into Social Security and that the money they now receive is theirs. These people have been duped and shouldn't be held totally accountable for such a belief. Let's look at it. The Social Security pamphlet of 1936 read, "Beginning November 24, 1936, the United States Government will set up a Social Security account for you. ... The checks will come to you as a right." Americans were led to believe that Social Security was like a retirement account and that money placed in it was, in fact, their property. Shortly after the Social Security Act's passage, it was challenged in the U.S. Supreme Court, in Helvering v. Davis (1937). The court held that Social Security was not an insurance program, saying, "The proceeds of both employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way." In a 1960 case, Flemming v. Nestor, the Supreme Court said, "To engraft upon Social Security system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands."
Benjamin Franklin, statesman and signer of our Declaration of Independence, said: "Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." John Adams, another signer, echoed a similar statement: "Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." Are today's Americans virtuous and moral, or have we become corrupt and vicious? Let's think it through with a few questions. Suppose I saw an elderly woman painfully huddled on a heating grate in the dead of winter. She's hungry and in need of shelter and medical attention. To help the woman, I walk up to you using intimidation and threats and demand that you give me $200. Having taken your money, I then purchase food, shelter and medical assistance for the woman. Would I be guilty of a crime? A moral person would answer in the affirmative. I've committed theft by taking the property of one person to give to another.
Our nation is rapidly approaching a point from which there's little chance to avoid a financial collapse. The heart of our problem can be seen as a tragedy of the commons. That's a set of circumstances when something is commonly owned and individuals acting rationally in their own self-interest produce a set of results that's inimical to everyone's long-term interest. Let's look at an example of the tragedy of the commons phenomenon and then apply it to our national problem.
Each year, roughly 7,000 blacks are murdered. Ninety-four percent of the time, the murderer is another black person. According to the Bureau of Justice Statistics, between 1976 and 2011, there were 279,384 black murder victims. Using the 94 percent figure means that 262,621 were murdered by other blacks. Though blacks are 13 percent of the nation's population, they account for more than 50 percent of homicide victims. Nationally, black homicide victimization rate is six times that of whites, and in some cities, it's 22 times that of whites. Coupled with being most of the nation's homicide victims, blacks are most of the victims of violent personal crimes, such as assault and robbery.
