<?xml version="1.0" encoding="UTF-8"?>
<rss version="2.0"
	xmlns:content="http://purl.org/rss/1.0/modules/content/"
	xmlns:wfw="http://wellformedweb.org/CommentAPI/"
	xmlns:dc="http://purl.org/dc/elements/1.1/"
	xmlns:atom="http://www.w3.org/2005/Atom"
	xmlns:sy="http://purl.org/rss/1.0/modules/syndication/"
	xmlns:slash="http://purl.org/rss/1.0/modules/slash/"
	>

<channel>
	<title>FrontPage Magazine &#187; Mark Hendrickson</title>
	<atom:link href="http://www.frontpagemag.com/author/mark-hendrickson/feed/" rel="self" type="application/rss+xml" />
	<link>http://www.frontpagemag.com</link>
	<description></description>
	<lastBuildDate>Wed, 31 Dec 2014 07:56:08 +0000</lastBuildDate>
	<language>en-US</language>
		<sy:updatePeriod>hourly</sy:updatePeriod>
		<sy:updateFrequency>1</sy:updateFrequency>
	
	<item>
		<title>The Tax Noose Tightens</title>
		<link>http://www.frontpagemag.com/2014/mark-hendrickson/the-tax-noose-tightens/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-tax-noose-tightens</link>
		<comments>http://www.frontpagemag.com/2014/mark-hendrickson/the-tax-noose-tightens/#comments</comments>
		<pubDate>Mon, 03 Nov 2014 05:30:28 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[damage]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Obama]]></category>
		<category><![CDATA[Tax]]></category>

		<guid isPermaLink="false">http://www.frontpagemag.com/?p=244257</guid>
		<description><![CDATA[Team Obama erects its invisible Berlin Wall. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2014/10/plk.jpg"><img class="alignleft  wp-image-244264" src="http://cdn.frontpagemag.com/wp-content/uploads/2014/10/plk-450x230.jpg" alt="plk" width="293" height="150" /></a>The political left in America remains obsessed with its grandiose visions of social engineering, increased government control of economic activity, and redistributive “justice.” For them, the state can never have too much power. Incurable<a href="http://www.viisionandvalues.org/2013/02/the-spendaholics-offensive/"> spendaholics</a> and, in President Obama’s case, actively pursuing a <a href="http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-ii/">Marxist economic platform</a>, they never have enough money to spend; hence, they are constantly plotting and striving to confiscate ever-more of the wealth produced in the private sector. With their ravenous and insatiable appetite for more revenues, they behave like a pack of <a href="http://www.forbes.com/sites/realspin/2012/04/19/team-obama-tax-predators-on-the-prowl/">tax predators</a>.</p>
<p>Even as Obama’s approval rating continues to sink, thereby jeopardizing Democratic control of the Senate after next Tuesday’s election, Team Obama has continued to tighten the tax noose around the necks of American citizens and businesses.</p>
<p>First, the pursuit of citizens: On Oct. 26, <a href="http://www.bloomberg.com/news/2014-10-25/hundreds-give-up-u-s-passports-after-new-tax-rules-start.html">Bloomberg reported</a>, “The number of Americans renouncing U.S. citizenship increased 39 percent in the three months through September” from the year-earlier period, seemingly due to the intrusive asset-disclosure rules that took effect July 1 under the Foreign Account Tax Compliance Act (FATCA). Obama still hasn&#8217;t achieved his ultimate tax fantasy—a UN-imposed and –administered global tax—but FATCA significantly ramped up the administration’s ability to monitor and pursue Americans’ wealth wherever in the world it may be.</p>
<p>Second, the aggression against businesses: Over the last few months, Team Obama has chided, vilified, and harassed American corporations that have been preparing to implement tax inversions—that is, purchasing a foreign corporation and then moving corporate headquarters to the foreign domicile to reduce the corporation’s tax liability. This has led to the nauseating spectacle of the minions of this most un-American of presidents publicly questioning the patriotism of Americans seeking refuge from the tax noose.</p>
<p>The common theme here is obvious: Americans are trying to escape the economic predations of our government. Let that sink in for a minute: For most of our history, America was a haven, a refuge—the place that people from around the world came to in order to escape the predations and oppressions of predatory governments. This was the Land of Opportunity, the place to come to pursue the American Dream—your dreams—in liberty, and get as rich as your talents and initiative would carry you.</p>
<p>Now, under the influence of progressive ideas, we have become politically corrupt and degenerate. Embracing the morally debased ethos that one is entitled to something for nothing in this world, and that it is right and proper for government to provide it even if it has to take property from others, we have approved of the erection of a massive transfer state characterized by an unseemly squabble over who gets what from whom. The government routinely takes the property of its citizens so politicians may buy the support of various voting blocs of individuals and of rent-seeking businesses practicing cronyism, not <a href="http://www.frontpagemag.com/2013/mark-hendrickson-capital-capitalists-and-capitalism-part-vi/">capitalism</a>. It is this morally and economically bankrupt state, sliding into a creeping tyranny of unelected, unaccountable bureaucracies which American citizens and businesses seek to escape.</p>
<p>Our founders would be heart-broken to see what succeeding generations have wrought. They would grieve that the current political class has turned America into a place where success is penalized, wealth is demeaned, the rich are persecuted, and property rights are disdained. It makes me sad and angry that America has become a place that people and businesses who have prospered feel they need to flee. This isn’t the real America.</p>
<p>Although the trend toward anti-America, the land of creeping tyranny, has been around for a long time, it is getting worse under Obama. A president who understood in American principles and believed in the American dream would seek to reduce the tax burden on individuals and businesses (the <a href="http://www.visionandvalues.org/2010/08/rethinking-the-corporate-income-tax/">optimum corporate income tax</a> rate would be zero percent) to make America more inviting to them, they instead treat them like criminals, enemies, or prisoners. FATCA represents the latest move to strip individuals of the last remaining shreds of financial privacy. The Treasury Department’s heavy-handed efforts to keep businesses from escaping offshore amount to the erection of an invisible Berlin Wall designed to thwart the desire to be free of an oppressive state.</p>
<p>Indeed, the way Team Obama is going about erecting that Berlin Wall is particularly egregious. In late September, Treasury Secretary Jack Lew announced that the Treasury Department has drafted new rules designed to prevent corporations from undertaking tax inversions. This is one of the many ways in which Obama has been making good on his threat to bypass Congress and rule by executive fiat. Essentially, Obama, Lew and the Treasury Department usurped the legislative prerogative of Congress. It is Congress that always (and rightly) has written the tax laws that govern American corporations. One hopes that, after the election, Republicans will have enough backbone to challenge Lew’s new rules in court.</p>
<p>Another disturbing aspect of Team Obama’s maneuvers against tax inversions is its collusion with the unelected bureaucrats, both American and foreign, of the Paris-based Organization for Economic Cooperation and Development. The OECD has a plan called the Base Erosion and Profit Shifting Project that finds ways for national governments to gather and share more detailed information about corporations’ finances. The OECD also has been encouraging member countries not to engage in tax competition (i.e., not to cut tax rates to attract more businesses to their countries) but instead to keep tax rates high.</p>
<p>The OECD role in helping Team Obama to corral American corporations is galling in several respects: 1) It is completely hypocritical for OECD bureaucrats, whose generous salaries are tax-exempt, to plot with governments to avoid reducing taxes on others (although this stance shouldn’t be surprising, since the OECD is funded entirely by taxes collected by national governments, so they aren’t about to bite the hand that feeds them); 2) Foreign-based, unelected bureaucrats, many of them not even Americans, are using our own tax dollars against us to plot strategies to keep our tax burden high (another cynical example of “your tax dollars at work”); 3) The OECD needs to drop the “D”—“Development”—from its name. This multilateral cabal indeed practices “Cooperation” by conspiring with tax-hungry governments to keep business taxes high, but they are clueless about “Development.” By working to keep business taxes high, they are acting contrary to every known economic theory of development. Even Lord Keynes understood that taxes essentially impede development rather than assist it.</p>
<p>Team Obama, which now includes international bureaucrats, continues to tighten the tax noose around the necks of Americans. They are doing everything they can to make it more difficult for Americans to elude the noose. In the long run, this may help our cause: With no place to hide, we may reach critical mass and find enough Americans who realize that we have no alternative but to fight back.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: </strong><a href="http://www.amazon.com/s/ref%3dnb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n:133140011%2ck:david+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n:133140011%2ck:david+horowitz&amp;sort=daterank"><strong>Click here</strong></a><strong>.   </strong></p>
<p><a href="http://horowitzfreedomcenter.us1.list-manage.com/subscribe?u=caa6f67f1482e6214d83be62d&amp;id=c761755bdf"><strong>Subscribe</strong></a><strong> to Frontpage&#8217;s TV show, <em>The Glazov Gang</em>, and </strong><a href="https://www.facebook.com/glazovgang"><strong>LIKE</strong></a><strong> it on </strong><a href="https://www.facebook.com/glazovgang"><strong>Facebook.</strong></a></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2014/mark-hendrickson/the-tax-noose-tightens/feed/</wfw:commentRss>
		<slash:comments>17</slash:comments>
		</item>
		<item>
		<title>The Worst Part Of Obamacare</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/the-worst-part-of-obamacare/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-worst-part-of-obamacare</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/the-worst-part-of-obamacare/#comments</comments>
		<pubDate>Tue, 10 Sep 2013 04:00:31 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Death Panels]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Health Care]]></category>
		<category><![CDATA[Insurance]]></category>
		<category><![CDATA[Obamacare]]></category>
		<category><![CDATA[Spending]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=203305</guid>
		<description><![CDATA[What the multitude of problems stemming from the law have prevented us from noticing. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/09/obamacare-supreme-court-cropped-proto-custom_28.jpg"><img class="alignleft  wp-image-203470" alt="obamacare supreme court-cropped-proto-custom_28" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/09/obamacare-supreme-court-cropped-proto-custom_28-450x336.jpg" width="315" height="235" /></a>If you were to ask a group of Americans to name the worst part of ObamaCare, you undoubtedly would get a wide variety of answers.</p>
<p>Trying to pick the worst aspect of the Patient Protection and Affordable Care Act (Obamacare) is a daunting task. There isn’t enough space in one article even to list all of its problematical aspects, but let’s mention several.</p>
<p>Surely, it’s sad to see the growing number of American hourly workers whose employers are cutting their hours to less than thirty per week to avoid triggering Obamacare expenses. Another bummer is that millions of Americans are finding—surprise!—that their health insurance premiums are rising smartly, despite Obama’s campaign promises that this wouldn’t happen.</p>
<p>I suspect that many voters are really ticked that Obama has colluded with Congress to exempt them and their high-income staffs from Obamacare. This brazen double standard—government officials being exempt from the very laws that they impose on citizens—is an egregious departure from the principles of American government.</p>
<p>Also worrisome is the noticeable increase in physicians planning to take early retirement. Doctors don’t want to deal with the oppressive bureaucratic heavy-handedness of Obamacare. Who can be happy about a healthcare-related law that shrinks the number of practicing physicians, thereby making health care less available?</p>
<p>While Obamacare is shrinking both the number of practicing physicians and the work weeks of many Americans, we must acknowledge that this law has some positive impacts on employment, too. The law calls for hiring 16,500 additional IRS agents and as many as 40,000 additional federal employees to manage the mountains of Obamacare-related paperwork. Golly, doesn’t that make you feel healthier already?</p>
<p>We should all feel uneasy about the arbitrariness inherent in the language of the law and in Obama’s implementation of it. Hardly a week goes by without the president unilaterally announcing that he has suspended this or that provision of the PPACA. And in regard to whatever parts of the law actually do take effect, the Secretary of Health and Human Services will have discretionary authority to determine what hundreds of ambiguous phrases in the law actually mean.</p>
<p>One of the least popular provisions of Obamacare involves the so-called death panels. Despite Team Obama’s vigorous denunciations of such a characterization of the Independent Payment Advisory Board that will handle the unpleasant task of rationing health care resources, but what else would you call an unaccountable, unelected panel whose budgetary mandate inevitably will lead to decisions to withhold treatments from patients who consequently will die? It may take awhile for IPAB to “advance” as far as its United Kingdom counterpart whose decisions to withhold care, according to some reports, are responsible for close to one-sixth of all deaths there.</p>
<p>In case you think that Team Obama is too compassionate to let such cold-blooded calculations enter into public policy, you should recall the administration’s policy towards Honduras about three years ago. The Honduran Congress and Supreme Court, acting in accordance with the clear language of their country’s constitution, removed from office President Manuel Zelaya. It turns out that Zelaya, apparently aspiring to be the next Castro or Chavez in Latin America, was organizing a campaign to rewrite the constitution to pave the way for him becoming “president for life.” Zelaya told Hondurans that those who refused to sign his petition would be denied access to government-funded health care. Obama, Clinton, and the rest of the administration energetically backed this monster. Do we really want such people to control American health care?</p>
<p>Another troublesome aspect of the PPACA is how it already has warped our own constitution with the complicity of the Supreme Court. I am referring, of course, to Chief Justice John Roberts’ astounding Supreme Court decision a few months ago, in which he affirmed Obamacare in such a way as to pave the way for the federal government to use its taxing power to exert evermore control over our economic life.</p>
<p>Indeed, the implementation of Obamacare has ridden roughshod over the very concept of the rule of law. Avik Roy’s <i>Forbes</i> blog on August 18 revealed the existence of an unpublished Congressional Research Service study showing that Team Obama already has missed half of the 82 explicit deadlines stipulated in the Affordable Care Act. Once again we see an ugly double standard: Government officials that fail to meet legal deadlines get a free pass, but private individuals or businesses that miss such deadlines are penalized, often quite severely.</p>
<p>Another glaring defect of Obamacare is that those who apply for Obamacare subsidies will not have to provide documentation of their income, other health insurance options, and other information that influence how much of a federal subsidy they qualify for. HHS bureaucrats will simply take them at their word. <i>The Wall Street Journal</i> astutely compared this policy to the “no-doc liar loans” that helped to inflate the housing bubble in the previous decade. How much do you want to bet that many of these “helpful” bureaucrats will be ACORN retreads and Democratic partisans?</p>
<p><i>Investors Business Daily</i> has been all over several disturbing developments that recently have come to light. Government employees, called “navigators,” will steer people into what supposedly will be the best decisions regarding their health care insurance. I have a close friend who is an insurance agent, and I know how hard he has to study to pass rigorous examinations demonstrating extensive, thorough understanding of an insurance product before he is licensed to sell it. Obamacare’s navigators, by contrast, will have Mickey Mouse training before they are turned lose to “help” you.</p>
<p>Another problem with the Obamacare navigators is that they will have access to all sorts of personal, confidential information about the citizens they interview, but because Team Obama is in a hurry to get the ball rolling, they have waived criminal background checks for these workers. Combined with the fact that Obamacare is moving full speed ahead on mining huge amounts of such data, and that the “Hub”  where all this information will be stored has not been tested for security, it could be that Obamacare will prove to be a bonanza for identity thieves and computer hackers.</p>
<p>It’s time to bring this to a close with my own choice for the worst aspect of Obamacare. While all of the above-mentioned aspects of the PPACA are disturbing, the most pernicious effect is all the brouhaha and confusion that Obamacare has caused. Why? Because Obamacare has been one gigantic distraction that has kept us from addressing the most crucial economic issue of all—the ticking fiscal time bomb that is Medicare and Medicaid. Federal spending on health care is projected to more than double from approximately $771 billion this year to $1.59 trillion in 2023—a mere ten years away. While we fuss and dither over Obamacare (which itself would add another $200 billion to annual federal health care spending) Medicare and Medicaid expenditures continue to soar, speeding us to the fiscal train wreck that will put the big hurt on us all.</p>
<p>That’s just my take on it. Feel free to enter your choice for the worst aspect of Obamacare under “Comments” up by the title of this article.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/the-worst-part-of-obamacare/feed/</wfw:commentRss>
		<slash:comments>32</slash:comments>
		</item>
		<item>
		<title>How Pension Plans Beguiled Us</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/how-defined-benefit-pension-plans-beguiled-us/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=how-defined-benefit-pension-plans-beguiled-us</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/how-defined-benefit-pension-plans-beguiled-us/#comments</comments>
		<pubDate>Mon, 26 Aug 2013 04:09:43 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[Defined-Benefit Pension Plans]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[flaw]]></category>
		<category><![CDATA[Left]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=201867</guid>
		<description><![CDATA[And how they will tear apart communities. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/pen.jpg"><img class="alignleft  wp-image-201978" alt="pen" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/pen.jpg" width="282" height="180" /></a>Having a pension plan has been part of the American Dream for millions of workers. Put in thirty or thirty-five years with a company, retire, and then the company will send you a check every month for the rest of your life—an attractive prospect. The amount of the check is pre-determined. It is a “defined benefit” promised to the worker.</p>
<p>Unfortunately, this simple vision has proved difficult to implement. The basic problem has been that pensions are a promise for the future, but nobody can guarantee the future. In our dynamic economy, the Schumpeterian process of “creative destruction” relentlessly weeds out the companies that no longer meet consumers’ most valued desires. As a result, one can work for a company for several decades, then see the company go broke, shut down, and—poof!—there goes the pension.</p>
<p>Theoretically, companies have been expected to set aside enough money to make good on their pension problems. This is easier said than done in competitive markets. In a year when revenues have fallen, does the company pay its suppliers or fund its pension when it can’t do both? Would employees rather take a cut in current pay so that the company could fund its retirement plan, or would they rather maintain current income and hope the company can find funds for the pension plan later? If the company raises its prices in an attempt to increase its revenue, the company may actually lose sales and revenues due to the elasticity of demand and the decision by marginal buyers to take their dollars elsewhere rather than pay higher prices.</p>
<p>When the Studebaker Corporation (if you’re a young reader, Studebaker made cars) closed in 1963 and many of its employees lost all or part of their promised pensions, it got the ball rolling for future federal involvement. A decade later, President Ford signed ERISA, the Employee Retirement Income Security Act. Among other provisions, ERISA initiated federal regulation of private pension plans, which included stipulating the extent to which defined-benefit pension plans had to be funded each year.</p>
<p>The crucial question is this: How much money should be set aside today in order to fully fund pension payments decades into the future? The feds understood that it would be impractical, if not impossible to set aside the full amount in the present, so they established guidelines based on discounting future obligations by an anticipated rate of return on current investments. While I can’t explain in detail how they compute the discount rate, the calculations include assumptions (i.e., guesses) about future interest rates, GDP growth, inflation and other unknowables. In other words, they totally winged it, and ended up assuming that pension fund assets would appreciate at a rate of 8% per year (now reduced to 7.5%). Oops. After the market collapse of 2008, many defined-benefit plans found themselves underfunded, and many employers have been forced to curtail other expenditures and deposit additional funds into their defined-benefit plans. Subsequently, the zero-interest-rate environment of recent years has rendered 7.5% an unrealistic rate of return.</p>
<p>As a result of these intractable difficulties, private-sector defined-benefit plans have become rare, replaced by defined-contribution plans whereby a company deposits what it has promised to deposit in employees’ pension plans today, and then has no further financial liability.</p>
<p>There is, however, one sector of the economy in which defined-benefit plans live on—in government. While private companies have found defined-benefit plans to be unfeasible due to their uncertain ability to increase revenues when needed, governments have retained defined-benefit pension plans, partly because they can (theoretically) raise taxes at will to obtain additional revenues, partly because it’s easier for them to promise generous pensions since it isn’t their own money that’s in play, and partly because politicians have a central bank to bail them out with newly created Federal Reserve notes to cover whatever red ink they spill.</p>
<p>Now this doesn’t necessarily guarantee that public sector employees’ defined-benefit plans are secure. The recent bankruptcy of Detroit is evidence of that. In fact, governments at all levels have jeopardized the defined benefit plans of government workers due to the profligate proclivities of politicians. According to Matthew Brouillette of the Commonwealth Foundation, here in Pennsylvania, the unfunded liability in the pension funds of public school teachers and state workers is a staggering $47 billion—assuming a 7.5% annual rate of return, which means that the total could be considerably larger. Other states are in even worse financial straits. New York State’s pension debts total $133 billion, Illinois’ $167 billion, and California’s $370 billion. The total for all fifty states lies in the $2.5-3.0 trillion range. Add the unfunded liabilities of the country’s cities, and the total swells to over $4.5 trillion. While chickenfeed compared to the tens of trillions of Uncle Sam’s unfunded liabilities, it’s still a huge deficit to make up. Brouillette calculates that the increases in Pennsylvania’s pension costs over the next four years comes out to approximately an extra $1,000 tax liability for every Pennsylvania family for the next four years.</p>
<p>The dichotomy of the private sector having predominantly defined-contribution pension plans while the public sector has predominantly defined benefit pensions raises serious questions about fairness. Why should government employees have the promised (though, as we have seen, not guaranteed) security of defined-benefit pensions while the defined-benefit plans of taxpayers are exposed to market risk? Further, when a local school district finds that its employees’ defined-benefit plan is underfunded, it is the local taxpayer who has who has to make up the entire difference. In effect, public teacher defined-benefit plans impose a blank check on future taxpayers, making teachers’ retirement plans a ticking time bomb for taxpayers.</p>
<p>The problem of unfunded public employee pension plans is enormous. PA Gov. Tom Corbett&#8217;s 2012-13 budget proposed increasing payments into state pension plans to $1.6 billion, a breathtaking 60% increase from the previous year’s $1 billion. By 2016, projected state and school district pension payments will balloon to $5.6 billion, an increase of more than 400% in just five years. And that’s just at the state level.</p>
<p>State and local governments’ need for significantly more tax revenues creates a politically explosive situation. Local taxpayers, most of whom have a defined-contribution pension plan—if, indeed, they have any pension plan at all—have seen their plans struggle in recent years, and many self-employed people have seen their incomes decline. There is going to be a lot of pushback when local school boards try to raise taxes on people who have been experiencing economic hardship in order to meet the looming shortfalls in the teachers’ defined-benefit plans.</p>
<p>In sum, defined-benefit plans beguiled us. Attractive on the surface, they were inherently flawed due to the impossibility of knowing the future. Now it appears that they will cause a huge amount of strife and divisiveness in communities and states across the country in the coming years. There will be a lot of pain, and the political struggle will be over how that pain is distributed. It may take decades to sort out the mess, but ultimately, the only fair and viable (though still imperfect) system would be for everyone to have defined-contribution pension plans. Getting from here to there isn’t going to be easy.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref%3dnb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n:133140011%2ck:david+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n:133140011%2ck:david+horowitz&amp;sort=daterank" target="_blank">Click here</a>.  </strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/how-defined-benefit-pension-plans-beguiled-us/feed/</wfw:commentRss>
		<slash:comments>4</slash:comments>
		</item>
		<item>
		<title>Capital, Capitalists and Capitalism (Part VI)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-vi/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=capital-capitalists-and-capitalism-part-vi</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-vi/#comments</comments>
		<pubDate>Wed, 14 Aug 2013 04:12:35 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[class]]></category>
		<category><![CDATA[Free-market]]></category>
		<category><![CDATA[Poor]]></category>
		<category><![CDATA[Rich]]></category>
		<category><![CDATA[Socialism]]></category>
		<category><![CDATA[wealthy]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=200478</guid>
		<description><![CDATA[The free market: the great enemy of social class systems. ]]></description>
				<content:encoded><![CDATA[<p><em><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/capital.jpg"><img class="alignleft  wp-image-200556" alt="capital" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/capital.jpg" width="280" height="210" /></a>Editor’s note: The following is the sixth, and final, installment of the FrontPage series “Capital, Capitalists and Capitalism” by Dr. Mark Hendrickson. Click the following for <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/">Part I</a>, <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/">Part II</a>, <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iii/">Part III</a>, <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iv/">Part IV</a> and <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-v/">Part V</a>. </em></p>
<p><b><span class="Apple-style-span" style="font-weight: normal;">We have already discussed how, despite overwhelming evidence to the contrary, most progressives and other advocates of more government intervention believe that Washington should have greater control over economic activity in order to increase prosperity for more people. We also have examined the glaring holes in their arguments of advocates of intervention who insist that government redistribution of property is fairer and morally superior to allowing free markets to distribute wealth. The third point they make in support of their statist agendas is the alleged problem of class divisions inherent in capitalism. Their arguments in this case are equally feeble. In fact, charges that capitalism divides people into irreconcilable classes is a hollow canard.</span></b></p>
<p>When one surveys the history of capitalism, starting with the onset of the Age of Capitalism in the 18<sup>th</sup> century, one can’t help but notice its revolutionary effects on social structure in addition to its pronounced positive economic effects. Pre-capitalist societies in Europe had been characterized by rigid social stratifications. A person born into a certain social stratum was doomed, barring a miracle, to die there. Royals, aristocrats, and their retinues enjoyed the privileges of a rigged Big Government system that enriched them and left the common man with such scant economic opportunities that having enough to eat was a recurring problem.</p>
<p>Capitalism changed all that. By virtue of its superiority in producing goods, capitalism “provided sustenance for the masses of paupers. Capitalists emptied the poor houses, the workhouses, and the prisons. They converted starving beggars into self-supporting breadwinners.”<sup>1</sup> Capitalism liberated millions from hereditary poverty. By shifting control of economic production from the privileged few to the masses (i.e, consumer sovereignty in free markets), new fortunes were made and old fortunes were eclipsed.</p>
<p>In short, tremendous upward mobility supplanted social stasis as capitalism multiplied opportunities for individual advancement. Capitalism sundered pre-existing class divisions and made it possible for the talented and industrious to make the proverbial leap from rags to riches. When Karl Marx and his successors fixated on the theory of class conflict, they were like the proverbial general fighting the last war. They were obsessed with the rigid, antagonistic class divisions that characterized the politico-socio-economic orders—feudalism and mercantilism—that preceded capitalism.</p>
<p>Capitalism, in fact, broke up the old order, supplanting rigid social hierarchies with social mobility. Capitalism unlocked the doors of economic progress for the masses, both by lowering the cost of goods so that those once too poor to purchase various goods now could afford to do so; and also by increasing the amount of capital in society so that it became possible for citizens from poor backgrounds to become entrepreneurs and make the proverbial leap from rags to riches.</p>
<p>It is historically inaccurate for socialists to accuse capitalism of sowing the seeds of class conflict by dividing society into classes whose interests were implacably opposed to each other. The calumny that capitalism would keep workers in a permanent state of inferiority has been disproved millions of times throughout American history. Worse, though, than the socialists’ diagnosis is their proposed cure for the class divisions allegedly created by capitalism. Socialism commits the very sin of which it accuses capitalism: It divides society into two classes, a dominant upper class and submissive lower class—the elite government planners and the masses of people, respectively.</p>
<p>Whereas capitalism represented a radical departure from the class divisions inherent in mercantilism, socialism seeks to reinstitute such divisions. Socialism is, in some very fundamental ways, a neo-mercantilist system. Indeed, by deposing the sovereign consumer—the democratic economic rule of Everyman—and replacing it with a privileged ruling class, socialism is politically reactionary.</p>
<p>The reason why capitalistic systems like the United States never fell prey to a worker’s revolt or class warfare was because the vast majority of Americans have seen that they could advance themselves economically without bloodshed or revolution. Instead, they could take advantage of the opportunities that capitalism continually presents. Why resort to force and violence if the system offers your children a better life by peaceful means? How can anyone organize a proletarian army of oppressed, impoverished malcontents if the members of the would-be army are climbing out of poverty and rising above (sometimes considerably above) their previous social status?</p>
<p>In the United States, the individual liberty that accompanies and characterizes capitalism has allowed millions of Americans to rise two, three, or even four quintiles in social rankings of income and net worth. America&#8217;s perennial economic, social, and political mobility has been a healthy antidote to class conflict, since anyone with the talent and initiative was free to go up the social/economic ladder, rendering notions of rigid class distinctions untenable. A U.S. Treasury study found that “over half of taxpayers moved to a different income quintile” in the ten-year period, 1996-2005.<sup>2</sup></p>
<p>It seems incredible that anyone would try to fan the flames of class conflict in the U.S. today when a middle-income American enjoys a standard of living that in many ways is more affluent than the lifestyle enjoyed by 19<sup>th</sup>-century monarchs. Today, the average poor American “has more living space than the typical non-poor person in Sweden, France, or the United Kingdom”; “80 percent of poor households have air conditioning” (as recently as 1970, only 36 percent of Americans had A/C); “31 percent have two or more cars”; “nearly two-thirds have cable or satellite TV,” etc.<sup>3</sup> It has to be hard to organize a movement based on income when society is so fluid and large numbers of people continually move up to higher income levels.</p>
<p>Socialists, progressives, and other opponents of capitalism are nothing if not persistent. As latter-day ideological heirs of Marx, they continue to see the world in terms of class conflict. They seem to need class conflict so badly that if they can’t find it, they will do their best to manufacture it. Whether consciously or not, government interference with free markets over the past two or three generations have managed to thwart capitalism’s natural tendency to lift people out of poverty and have produced a long-term (some sociologists even use the adjective “permanent”) underclass in American society.</p>
<p>Many social scientists—Charles Murray preeminent among them—have documented the secular trend toward declining poverty rates over the course of American history.<sup>4</sup> Except when this trend was interrupted during the Great Depression of the 1930s (itself a tragic sequence caused by a succession of pernicious policy mistakes in Washington)<sup>5</sup> free-market capitalism reduced the incidence of poverty in every decade—until the mid-1960s when the poverty rate quit declining and has remained range-bound ever since.<sup>6</sup></p>
<p>What policies interrupted capitalism’s progress against poverty? One has been the devastation and even literal destruction of thriving black business communities in the name of urban renewal.<sup>7</sup> Another was the breakdown of the black family, famously warned about by Daniel Patrick Moynihan in 1965, and then abetted by a series of government anti-poverty programs that created what Heritage Foundation analyst Robert Rector memorably dubbed “the incentive system from hell” that financially rewarded and incentivized single parenthood. Another was the strategy resulting in the Curley effect, by which interventionist politicians kept large numbers of inner-city residents in various misnamed <i>social welfare</i> programs in exchange for their political loyalty. This deal with the devil lured many urban residents to accept a state of permanent economic dependence on the political plantation of slick politicians who purveyed their status as <i>defenders of the poor</i> into permanent control of city governments. Thus, we have essentially one-party hegemony in America’s poorest, most rundown cities.<sup>8</sup></p>
<p>By blaming stubborn poverty on capitalism, those advocating more government economic intervention are projecting their own faults onto others. It is government intervention that is responsible for the unnecessarily large size of the chronically poor in America. Capitalism is no panacea; people can still be poor where there is capitalism (read the book of <i>Proverbs</i> for numerous reasons why that is the case), but the historical record of capitalism has proven that it does more to promote upward economic mobility than any form of socialism or interventionism.</p>
<p>The assertion that capitalism leads to class conflict is not only historically false; it is a cynical lie. Rigid class divisions—economic, social, and political—are only possible where governments subvert free markets and impede people’s ability to advance economically. It takes a powerful government, or a strong cultural-religious caste system, to maintain rigid class distinctions. Capitalism does not erect divisions between economic classes; it demolishes them. Far from being the cause, as Marx and his followers claimed, capitalism is the antidote for class conflict.</p>
<p>The left talks a lot about “peace.” What could be more peaceful than free individuals choosing with whom to interact economically for mutual benefit in the noble framework known as <i>capitalism</i>? In such a system where voluntary action is the rule and individual rights are respected, human beings encounter allies, not enemies, and individual self-interest tends toward harmony instead of conflict. Perhaps this is the greatest and most blessed feature of capitalism, and a primary reason for why capitalism is worth defending and preserving.</p>
<p><strong>Notes:</strong></p>
<p><sup>1</sup> Ludwig von Mises, <i>Human Action</i>, Scholar’s Edition, p. 615.</p>
<p><sup>2</sup> “Income Mobility in the U.S. from 1996 to 2005,” Report of the Department of the Treasury, November 13, 2007.</p>
<p><sup>3</sup> Official government data cited in “Understanding Poverty in the United States&#8230;”  March 22, 2012, <a href="http://www.projectworldawareness.com/2012/03/understanding-poverty-in-the-united-states-surprising-facts-about-americas-poor/">www.projectworldawareness.com/2012/03/understanding-poverty-in-the-united-states-surprising-facts-about-americas-poor/</a>.</p>
<p><sup>4</sup> Charles Murray, <i>Losing Ground: American Social Policy 1950-1980</i>, New York: Basic Books, Inc., 1984.</p>
<p><sup>5</sup> Cf. Lawrence Reed, “Great Myths of the Great Depression,” <a href="http://www.mackinac.org/4013">www.mackinac.org/4013</a>; Burton Folsom, <i>New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America</i>, New York: Threshold Editions/Simon &amp; Schuster, 2008.</p>
<p><sup>6</sup> Ezra Klein’s “Wonkblog,” “Poverty in the 50 years since ‘The Other America,’ in five charts,” The Washington Post, posted July 11, 2012, <a href="http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/11/poverty-in-the-50-years-since-the-other-america-in-five-charts/">www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/11/poverty-in-the-50-years-since-the-other-america-in-five-charts/</a>.</p>
<p><sup>7</sup> Cf. Ellen Pierson, “Race and City Planning in Pittsburgh’s Hill District,” 16 May 2008, posted in “The Not-So-New Face of Urban Renewal,” <a href="http://documents.kenyon.edu/americanstudies/">documents.kenyon.edu/americanstudies/</a>; Matt Lakin, “1960s brought end to segregation, prohibition,” July 29, 2012.<a href="http://www.knoxnews.com/news/2012/jul/29/1960s-brought-end-to-segregation-prohibition/?print=1">www.knoxnews.com/news/2012/jul/29/1960s-brought-end-to-segregation-prohibition/?print=1</a>; Peter Dreier, “Jane Jacobs’ Radical Legacy,” National Housing Institute Issue #146, Summer 2006, <a href="http://www.nhi.org/online/issues/146/janejacobslegacy.html">www.nhi.org/online/issues/146/janejacobslegacy.html</a>.</p>
<p><sup>8</sup> Edward L. Glaeser &amp; Andrei Shleifer, “The Curley Effect: The Economics of Shaping the Electorate,” Department of Economics, Harvard University,2005, <a href="http://www.economics.harvard.edu/facutly/shleifer/files/curley%E2%80%94effct.pdf">www.economics.harvard.edu/facutly/shleifer/files/curley—effct.pdf</a>.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-vi/feed/</wfw:commentRss>
		<slash:comments>46</slash:comments>
		</item>
		<item>
		<title>Capital, Capitalists and Capitalism (Part V)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-v/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=capital-capitalists-and-capitalism-part-v</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-v/#comments</comments>
		<pubDate>Tue, 13 Aug 2013 04:06:45 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[Corporation]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Free-market]]></category>
		<category><![CDATA[Freedom]]></category>
		<category><![CDATA[Socialism]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=200359</guid>
		<description><![CDATA[The ethical wonder of the free market. ]]></description>
				<content:encoded><![CDATA[<p><b><span class="Apple-style-span" style="font-weight: normal;"><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/144-free-market-killed-the-coffee-industry.jpg"><img class="alignleft  wp-image-200360" alt="144-free-market-killed-the-coffee-industry" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/144-free-market-killed-the-coffee-industry.jpg" width="245" height="185" /></a></span></b><em>Editor’s note: The following is the fifth installment of the FrontPage series “Capital, Capitalists and Capitalism” by Dr. Mark Hendrickson. Click the following for <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/">Part I</a>, <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/">Part II</a>, <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iii/">Part III</a> and <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iv/">Part IV</a>. </em></p>
<p><b><span class="Apple-style-span" style="font-weight: normal;">The opponents of capitalism charge that capitalism concentrates power and wealth unjustly in the hands of an elite, to the detriment of the masses of people. Let’s take a look at power first.</span></b></p>
<p>Large private corporations are a favorite bogeyman of anti-capitalists. There can be no denying their economic importance and impact, but <i>power</i>? Power to do what to whom?</p>
<p>Under capitalism, corporations don’t have the power to compel anybody to invest in their business, give them supplies, or lend them money. They certainly can’t compel consumers to buy their products. Instead, they have to win the patronage of consumers, gain market share, and earn profits (i.e., succeed) on their own merit—their efficiency, their adroitness at serving consumers, their adaptability, skill, talent, and effort.</p>
<p>In a free market, even the largest and most prestigious firm today will shrivel and perhaps die if it fails to keep abreast of what the ever-changing sovereign consumer prefers. If you don’t think so, check out a list of the mega-corporations included in the Dow-Jones Industrial Average over the last century. You will see that many of the corporate giants of yesteryear no longer exist.</p>
<p>Whatever happened to American Can, Pan Am Airways, Studebaker, Smith-Corona, Montgomery Ward, Circuit City? They are just a few of the allegedly powerful corporations to whom the sovereign consumer gave a thumbs down and revoked their lease to serve them. Think, too, of the A&amp;P grocery stores, Howard Johnson restaurants, and other once-dominant firms that barely survive. What kind of power do they have?</p>
<p>It may appear today that Wal-Mart and Apple Computer will dominate their respective markets indefinitely, but in fact, there are only two ways for them to remain Number One in the decades to come: Either they will continue to excel over their competition in giving the consumers the most value for their dollars, or their position will be protected by some sort of alliance with government, whether that be by subsidies, legal or regulatory protection against competition, or some form of nationalization.</p>
<p>“But wait,” you say, “You can’t deny that American corporations today wield enormous political influence through their lobbying activities. Just look at all the bailouts, corporate welfare, etc.” Yes, exactly so. In that sense, corporations indeed gain some power at the expense of consumers and taxpayers. But if a corporation is enriching itself through the political process, that does nothing to discredit capitalism, for, as we have already said, such political favoritism constitutes cronyism and is the antithesis of capitalism.</p>
<p>The only businesses that wield any true power over consumers are the businesses in non-capitalistic systems that are propped up by the power of the state. The most extreme example of business enterprises having power to depose the sovereign consumer is in the very system that those who complain about corporate power advocate as an alternative: socialism. Under socialism, the state compels resources to be diverted to state-owned enterprises, and then it continues to prop them up regardless of whether consumers are satisfied with them. Under socialism, the counterfeit pseudo-capitalists (the political appointees) in charge of these enterprises are unaccountable to the people. They have the full power of the state behind them. This enables them to treat consumers badly and operate the business inefficiently with impunity, insulated from the financial loss and failure that a privately owned business behaving so poorly would suffer.</p>
<p>The greater the state support of business enterprises, the more sovereign power is taken away from consumers. Those concerned about power and justice need to understand that consumer sovereignty is the ultimate economic democracy. Consumer sovereignty means that everyone’s economic values and choices help to shape and determine the pattern of economic production. Every dollar vote counts. Under this economically democratic system, power is diffused over the entire population.</p>
<p>By contrast, under socialism, economic power is concentrated in the hands of a tiny elite, the government planners. Socialism thus subverts rather than strengthens democracy. Similarly, to the governments in various mixed economy systems use their power to commandeer resources, and to tax, spend, and regulate, they indeed overrule the will of the people in terms of what is produced and who produces it. When speaking of economic power, only governments have the power to force their desired outcomes on an unwilling public; capitalistic businesses do not.</p>
<p>It is simply incorrect to assert that capitalism concentrates power in the hands of private businesses. The second allegedly unfair aspect of capitalism—that it enriches businesses at the expense of the citizenry—is also a myth. Yes, in capitalistic systems, businesses can accumulate spectacular riches. More precisely, some businesses can. The critics of capitalism tend to forget that under capitalism, a majority of U.S. business enterprises fail within four years,<sup>1</sup> and that, as recently mentioned, even the most successful corporations eventually die out.</p>
<p>The pertinent question is: Is there anything inherently illicit or objectionable about some corporations amassing billions of dollars of profits? In the absence of force or fraud, the answer is “no.”</p>
<p>The beauty and fairness of capitalism is that people prosper in proportion as they supply economic value to others. Henry Ford, for example, earned a fortune many, many times as large as that earned by his fellow automobile maker, Henry Royce, because Royce delivered value to a small number of people while Ford delivered economic value to millions of people. Indeed, it is in the nature of capitalism the largest business fortunes result from having rendered economic value to large numbers of people.</p>
<p>The economically illiterate tend to look at hugely successful businesses and speak of them as if they are a menace to society. It is a strange mentality indeed that regards economic benefactors as an antisocial pestilence. What such critics generally fail to grasp is the actual economic significance of profits earned in a free market in which all transactions are voluntary and uninfluenced by government intervention.</p>
<p>What does it mean when a corporation earns gonzo profits? To answer that question, we need to know why consumers willingly paid the prices that produced a spectacular rate of profit. In a free market, voluntary exchanges are positive sum, meaning that the buyers valued what they bought more highly than they valued the money they paid (perhaps quite a bit more than what they paid—what economists call <i>consumer surplus</i>). In other words, however gaudy a business’s profits, they created more than that amount of value for their customers.</p>
<p>To assert that it is somehow unfair for an exceptional capitalistic enterprise to earn large profits is to assert that it isn’t fair for one entity to create so much value for others. On what ethical grounds can one say that it is fair to limit how much good any individual or corporate enterprise can do for others? To seek to impose higher taxes on such economic benefactors is to punish beneficence. It is also unfair to workers, because profits are a major source of the new capital that will fund new jobs, produce new goods and services, and further uplift standards of living.</p>
<p>The ethical essence of capitalism is that it rewards voluntary service to others. By contrast, government intervention uses state power to support some enterprises over others. Those firms don’t have to excel at meeting the needs of consumers. Often they don’t have to take into consideration consumers’ wishes at all. They are subsidized and supported according to their political pull rather than their economic service. They benefit from privileges that the rest of us don’t have—a manifest injustice.</p>
<p>The fact is, there is no system of interpersonal economic relations other than capitalism that is predicated on the principle and practice of doing unto others as you would have them do unto you. In truly free markets, the only legitimate way to enrich oneself is to render unto others something of value to them.</p>
<p>The ethical principle that wealth in any amount is legitimate, so long as it is acquired through honest service to others will not satisfy those who are committed to what they perceive as the ethical principle of egalitarianism. A full rebuttal of egalitarianism lies beyond the scope of this short work, but it is self-evident that each individual human being is different in terms of abilities, talents, skills, drive, discipline, industry, etc. Economic differences, then, are built into the cake of human society. Egalitarians are at war with either God or evolutionary nature—whichever they believe is responsible for the present human condition of differentness. They are obsessed with wanting to correct what they believe to be a cosmic blunder. Their solution is always the use of government force, redistributing property from productive citizens and businesses to favored recipients (presumably the less productive, although the subsidies to firms like GE and Archer-Daniels-Midland show that the well-to-do often are on the receiving end of supposedly just redistribution).</p>
<p>Ethically, the egalitarians and redistributionists have a problem. Their agenda rests on the problematical premise that some people have a right to property taken from others without compensation. Such compulsory transfers of property are technically unconstitutional according to the Fifth and Thirteenth Amendments. The Fifth guaranteed that no person “be deprived of life, liberty, or property, without due process of law” (i.e., a judicial proceeding, not a legislative act); the Thirteenth abolished chattel slavery and “involuntary servitude,”  which would include being compelled to surrender part of one’s income to others upon whom the state had bestowed a special privilege.</p>
<p>Those in favor of government redistribution of property have another ethical problem: Where is the principle that tells them how far to go in the process of redistributing property? Once they decide the state should bestow a favor on Mr. A, why shouldn’t they do something for B, C, D, et al.? Furthermore, if the state does favors 1, 2, and 3 for some citizens or businesses, why not 4, 5, 6, etc., too? The fact is, there is no ethical guideline showing how far it is right to proceed along these lines. What happens in practice, then (as is the case in the contemporary USA), is that whatever political coalition has enough votes simply bestows however much property it has the power to dole out. This is the crude, primitive ethical precept, “might makes right.”</p>
<p>With ethical principles as primitive as “might makes right” supporting their political agenda, it is little wonder that the opponents of capitalism try to change the subject by condemning capitalism for breeding greed. This is a red herring. In the first place, greed can surface in any human society. Indeed, some of those who denounce capitalism manifest a virulent greed for power, fame, and privilege. More importantly, though, capitalism has built-in defenses against greed, so that greed becomes irrelevant.</p>
<p>One of the more interesting curiosities of the pro-capitalism intellectual camp is the vigorous debate between followers of Ayn Rand, who insist that selfishness is the basis of capitalism, and George Gilder and others, who insist with equal vehemence that capitalism is essentially altruistic.<sup>2</sup></p>
<p>What matters in a free-market economy is not someone’s intent or motivation, but his actions. Let’s assume a particular merchant is ambitious, driven, and greedy, obsessed with getting rich. Some critics have made such accusations against highly successful American entrepreneurs, such as Richard Sears, under whose leadership Sears became a retail titan. Are those accusations true? Maybe, but it doesn’t matter (at least, not to the public, although an obsession with success may cause serious problems in one’s family life, but that is a private matter). In a free market, in which force and fraud are outlawed, how can any greedy person achieve great wealth? The means to that end is to out-compete others in serving the economic wants of others, and to do it over and over for more and more people.</p>
<p>Contrariwise, let’s assume someone is impelled by altruistic motives so that their primary goal is to be of service to others by supplying them with what they need for a lower price than anyone else. The only viable way to be able to continue doing this year after year (absent having an inexhaustible source of wealth from inheritance or donations from others) would be to earn enough of a profit to be able to afford to continue doing good for others. As Ludwig von Mises summarized it nine decades ago:</p>
<p>“In the society based on division of labor and cooperation, the interests of all members are in harmony, and it follows from this basic fact of social life that ultimately action in the interests of myself and action in the interest of others do not conflict, since the interests of individuals come together in the end. Thus the famous scientific dispute as to the possibility of deriving the altruistic from the egoistic motives of action may be regarded as definitely disposed of.”<sup>3</sup></p>
<p>In sum the ethical gap between capitalism and alternative economic systems is immense. At the risk of over-simplifying, it boils down to one fundamental antipodal difference: Capitalism rejects the use of force, whereas interventionism relies on force; in capitalistic systems, economic transactions are voluntary; interventionism compels involuntary exchanges; capitalism sides with individual rights against the encroachments of state power; interventionism exalts, to varying degrees, state power above individual rights; where there is capitalism, all people, rich and poor, are equal before the law; where there is interventionism, George Orwell’s warning from <i>Animal House</i> comes into play: “All animals [citizens] are equal, but some animals are more equal than others.”</p>
<p><strong>Read Part VI of this series in the next issue of FrontPage Magazine.</strong></p>
<p><strong>Notes:</strong></p>
<p><sup>1</sup> U.S. Bureau of Labor Statistics cited in Amy E. Knaup, “Survival and longevity in the Business Employment Dynamics data,” <i>Monthly Labor Review</i>, May 2005, p. 51.</p>
<p><sup>2</sup> One of the most famous passages in the history of economic literature is Adam Smith’s discussion of the importance of self-interest in human commerce, but Smith clearly sees that where no force is used, self-interest conduces to peaceful cooperation and reciprocal benefit. See Smith’s <i>Wealth of Nations</i>, Book 1, Chapter II.</p>
<p><sup>3</sup>Mises, <i>Socialism</i>, pp. 397-8.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-v/feed/</wfw:commentRss>
		<slash:comments>5</slash:comments>
		</item>
		<item>
		<title>Capital, Capitalists and Capitalism (Part IV)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iv/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=capital-capitalists-and-capitalism-part-iv</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iv/#respond</comments>
		<pubDate>Mon, 12 Aug 2013 04:20:30 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Free-market]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[monopoly]]></category>
		<category><![CDATA[Socialism]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=200255</guid>
		<description><![CDATA[Why socialism inevitably fails. ]]></description>
				<content:encoded><![CDATA[<p><em><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/0130-money_full_600.jpg"><img class="alignleft  wp-image-200269" alt="0130-money_full_600" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/0130-money_full_600-450x329.jpg" width="270" height="197" /></a>Editor’s note: The following is the fourth installment of the FrontPage series “Capital, Capitalists and Capitalism” by Dr. Mark Hendrickson. Click the following for <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/">Part I</a>, <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/">Part II</a> and <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iii/">Part III</a>. </em></p>
<p><b><span class="Apple-style-span" style="font-weight: normal;">In the earlier installment about “<a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/">Capitalists</a>,”  we discussed how capitalists raised the standard of living of their employees. While the pace of past economic progress seems agonizingly slow to us from our vantage point of mass affluence, the Age of Capitalism (starting in the 1700s) inaugurated a new era in which the pace of wealth production, and therefore, standards of living, improved in every succeeding generation.</span></b></p>
<p>The Age of Capitalism dawned in the 18<sup>th</sup> century. Since then, capitalism has liberated the majority of human beings from the bondage of chronic poverty in which they had been trapped for thousands of years. By lifting billions out of poverty, it has produced a new phenomenon in the history of the human race: Entire countries now have affluent middle classes numbering in the millions. Perhaps most wonderfully, capitalism’s superior productivity has resulted in a great increase in human longevity, enabling the human population to multiply far beyond the cramped limits which pre-capitalist production had mercilessly imposed from time immemorial.</p>
<p>Since most people prefer prosperity to poverty, few leftists are so audacious as to criticize capitalism for its unprecedented ability to generate wealth (although some of the more radical greens advocate economic de-development). Indeed, even such an arch-enemy of capitalism as Karl Marx acknowledged capitalism’s superior economic performance. He cited its “low prices,” its creation of “enormous cities,” and that, “during its rule of scarce one hundred years, [it] has created more massive and more colossal productive forces than have all preceding generations together.”<sup>1</sup></p>
<p>Contemporary critics of capitalism focus on its alleged unfairness. That claim will be analyzed in the next installment of this series. First, though, it is important to understand why capitalism produces more wealth than any other system of economic organization, and thus to comprehend the unavoidable fact that replacing capitalism with any known alternative will come at a stiff price: It will make people poorer.</p>
<p>Despite capitalism’s demonstrated ability to lift the masses out of poverty, anti-capitalists of various stripes claim that they have a better deal for “the people.” They assert that government planning and control can make economic production more rational and efficient, and so make society more prosperous, than can unplanned free markets. This is an enormous intellectual error.</p>
<p>The theory of centralized economic planning overlooks the fact that there is plenty of planning involved in free markets. The difference is that, in a free market, the planning is diffused among virtually the entire population in which everyone shapes production in their role as “the sovereign consumer,” whereas under government control, economic planning is shifted away from everyone to a relatively small number of government-appointed planners.</p>
<p>It is a delusion to believe that government-appointed experts are capable of arranging production to maximize economic value, wealth creation, and standards of living for “the people.”  Even if that were the planners’ goal (in practice, it never is) and even if the government appointed the world’s most brilliant, fair-minded, kind-hearted geniuses to plan and oversee production, those experts are doomed to fail. They can never know what Joe Lunchbucket wants as well as Joe knows. (Even if we concede the impossible—i.e., that a committee of planners could figure out what everyone wanted in real time, thereby replicating the flow of economic information that free-market prices transmit—the overhead costs of such a bureaucracy inevitably would make the society poorer, because the people would be paying for a service that market prices render for free.</p>
<p>The anti-capitalists haven’t grasped that government intervention inevitably makes economic planning less rational. This is so because, in a market economy, the economic rationality (that is, his hierarchy of preferences about what he wants) is communicated through ever-adjusting market prices reflecting the ever-changing constellations of supply and demand. This economic information guides producers to produce what is most highly valued—that is, to meet consumers’  most highly valued needs, which is another way of saying “to maximize wealth.” To the extent that government intervention suppresses, censors, and replaces the economic information communication through free-market prices, the rational input into, and hence the value of, national production is reduced. In other words, people are made poorer when government intervention prevents them from getting what they most value, and instead forces producers to produce things that people value less.</p>
<p>The most irrational economic system of production is socialism. Under socialism, there is no private ownership of the means of production; thus, the bulk of economic production has been taken from producers who must compete to serve the most highly valued needs of consumers. Instead, the state allows a small elite to determine what gets produced, and in support of the official plan, the state has the power to continue diverting scarce resources from the production of goods more highly valued by the people to goods less highly valued. Socialism, therefore, lacks markets whereby supply and demand can help participants discover the market-clearing price (the price where supply meets demand). Consequently, instead of prices being economically rational and communicating what the people value most highly, the central planners have to set prices by guessing what they think they should be.</p>
<p>My friend Dr. Yuri Maltsev, an economic adviser to Soviet leader Mikhail Gorbachev, once worked in the Soviet price-setting council. There, a staff of 328 bureaucrats was in charge of setting 23 million different prices.<sup>2</sup> This caused at least two major problems. First, that council had to set prices of consumer goods without knowing what consumers wanted most. This rendered Soviet prices arbitrary and irrational, insofar as they were divorced from the economic realities of supply and demand. Second, unlike market prices that can fluctuate moment by moment in response to changes in supply and demand, the council’s “guestimated” prices remained inflexible for protracted periods of time, since the council could only revisit and adjust prices at multi-year intervals due to the sheer number of prices they were supposed to manage.</p>
<p>As anyone who has taken Economics 101 knows, if the planners set prices too high, they produced unwanted surpluses; if too low, then there were painful shortages. The common citizen in the Soviet Union suffered from both. It doesn’t take a degree in economics to understand that if a system wastes precious resources by producing some things that people don’t want and not enough of other things that they do want, that those people will have been made poorer by the very system that was supposed to prosper them.</p>
<p>Another insuperable defect of not having economically meaningful prices (that is, prices that reflect what people value most highly) is that it is impossible to measure profit and loss. There is no way to tell whether individual enterprises are increasing or decreasing wealth. Socialists mistakenly believe that profits are wasteful; in fact, profits are essential for the economic well-being of society. Regardless of the economic system under which one lives, if factors of production with a total value of A are arranged in such a way that they are now worth A+1, then there is more wealth in society. Profits, then, represent newly created wealth and the economic progress of a society.</p>
<p>Conversely, if factors worth A are arranged to produce something worth A-1, then society has less wealth than before. Under capitalism, money-losing enterprises either mend their ways or go out of business. For a money-losing business to close its doors is economically beneficial to society. It curtails uneconomic, wealth-destroying activity and releases misallocated scarce economic resources to be redeployed to more rational (i.e., profitable) uses. Government intervention, by contrast, often props up and subsidizes wealth-depleting enterprises for years, making a society poorer.</p>
<p>The profits generated by capitalism are of great historical significance. In the pre-capitalist systems of feudalism and mercantilism, the system was rigged to prosper the elite at the expense of the masses. Capitalism, by contrast, doesn’t guarantee economic success. Instead, it forces entrepreneurs to earn profits by out-competing others in serving consumers, and punishes those who don’t serve consumers well. Socialism claims to be a step in advance of capitalism, but it rejects profits (i.e., new wealth) categorically and so guarantees the impoverishment of the masses much as the pre-capitalist systems did.</p>
<p>Besides misunderstanding profits, the opponents of capitalism also misunderstand monopolies. They accuse capitalism of promoting rapacious monopolies that devour the economic substance of the people. There are a couple of very serious holes in this argument.</p>
<p>In his classic essay, “The Phantom Called ‘Monopoly,’” economist Hans Sennholz described capitalism’s natural defenses against monopoly<sup>3</sup>: 1) The sovereign consumer may substitute other goods; 2) demand is, in varying degrees, elastic (that is, as prices rise, more and more buyers simply do without; 3) in a market economy, the ever-present invisible threat of new competitors entering into markets with unusually high profit margins restrains would-be monopolists from engaging in price gouging.</p>
<p>In actuality, monopolies have been exceedingly rare in the United States. Two of the most famous—the post office and, until the 1980s, “Ma” Bell, the AT&amp;T long distance telephone monopoly—were established by government decree, not by market forces.</p>
<p>Of course, some private corporations have become gigantic and highly profitable while achieving dominant market shares. However, the leftist assertion that such firms obtained their fortunes at the expense of consumers does not withstand scrutiny. As Dominick Armentano documented so ably in <i>Antitrust and Monopoly: Anatomy of a Policy Failure,</i><sup>4</sup> his classic study of many of the landmark antitrust cases in American history, the government found itself in the peculiar position of prosecuting firms that not only were not monopolies, but which had been charging consumers lower prices than their competitors had been charging rather than exploiting their dominant market share to charge the kind of high, rapacious prices for which monopolies are feared.</p>
<p>It is a strange jurisprudence that punished companies for being the benefactors of consumers and key agents of rising standards of living. The only beneficiaries of prosecuting and penalizing corporations for having served consumers well have been the less efficient competitors who were given a reprieve from the consumers’ “thumbs down”  verdict—a form of cronyism amounting to a government rescue or bailout.</p>
<p>There is great irony (and more than a little hypocrisy) in people insisting that socialism is preferable to capitalism on the grounds that capitalism spawns monopolies: Under socialism, the state establishes monopolies as the normal mode of organization. Far from providing a refuge from monopolies, socialism is, in fact, an entire system of monopolies. Under socialism, political elites forbid economic competition and charge whatever price they want. Henry Ford and the other hugely successful entrepreneurs that emerged under capitalism never came close to holding the kind of power over consumers that socialist central planners exercise.</p>
<p>Naively, many people believe that monopolies under socialism are benign, because socialists don’t try to make profits—that is, they forsake the creation of new wealth while focusing on redistributing and subsidizing the consumption of society’s existing wealth. What eludes the apologists of socialism is that monopolies insulated from potential competitors by the government always have a tendency to lapse into undesirable monopolistic practices. Soviet monopolies, for example, were notorious for producing goods of shoddy quality and for offering poor service to consumers. Indeed, clerks often treated citizens standing in lines rudely, because the consumers had nowhere else to go (except for risky forays into black markets).</p>
<p>In short, socialism simply can’t match the economic productivity of capitalism. Mises figured this out nine decades ago. In his book, <i>Socialism</i>, Mises demonstrated logically, from an economically scientific perspective, that socialism inevitably cripples economic production because of its monopolistic inefficiencies and its absence of a tool (i.e., market-based prices) with which to make economic calculations.<sup>5</sup> Even the socialist intellectual and economic historian, Robert Heilbroner admitted, when the Soviet Union collapsed seven decades after Mises’ prescient analysis, “Mises was right.”<sup>6</sup></p>
<p>Despite the overwhelming historical evidence of socialism’s inherent defectiveness, many American intellectuals remain determined to find an alternative to capitalism. They are convinced that government intervention into the economy is better than genuine, untrammeled capitalism. They seek “a middle way” between capitalism and socialism, a mixed economy that will combine the best features of both systems.</p>
<p>The problem is, the hoped-for “middle way,” the seductive vision of a system that combines the supposed virtues of both capitalism and socialism, is a chimera. Both the avowed enemy of capitalism, Karl Marx, and the unwavering champion of capitalism, Ludwig von Mises, agreed that government economic intervention breeds additional intervention, inexorably pushing society toward socialism by increments.<a href="https://mail-attachment.googleusercontent.com/attachment/?ui=2&amp;ik=a929d6cd39&amp;view=att&amp;th=14026b7b4421fa32&amp;attid=0.4&amp;disp=vah&amp;zw&amp;saduie=AG9B_P9TijVFtqY0LhzHew5Cqtih&amp;sadet=1376283436980&amp;sads=J9bNOQR-Kq9te69JygiWqUlJmqU#0.4_footnote7"><sup>7</sup></a>  Multiple studies show that the greater the degree of government economic intervention—that is, the greater the percentage of Gross Domestic Product consumed by government—the slower the rate of economic growth in that country.<sup>8</sup></p>
<p>In sum, the argument that socialist planning can improve upon capitalism’s unprecedented productivity is fallacious. That is why most proponents of greater government control of economic activity emphasize the fairness angle. Those arguments, too, are problematical, as we shall see in the next installment.</p>
<p><strong>Read Part V of this series in the next issue of FrontPage Magazine.</strong></p>
<p><strong>Notes:</strong></p>
<p><sup>1</sup> See Chapter One, “The Communist Manifesto.”</p>
<p><sup>2</sup> Yuri N. Maltsev in conversation with Mark Hendrickson February 14, 2012.</p>
<p><sup>3</sup> Hans F. Sennholz, “The Phantom Called ‘Monopoly,’” <i>The Freeman</i>, March 1960, pp. 39-52. <a href="http://www.thefreemanonline.org/features/the-phantom-called-quotmonopolyquot/">www.thefreemanonline.org/features/the-phantom-called-quotmonopolyquot/</a>.</p>
<p><sup>4</sup> Dominick T. Armentano, <i>Antitrust and Monopoly; Anatomy of a Policy Failure</i>, New York: John Wiley &amp; Sons, 1982.</p>
<p><sup>5</sup> Mises, <i>Socialism</i>, pp. 95-103.</p>
<p><sup>6</sup> Robert Heilbroner, “After Communism,” <i>The New Yorker</i>, September 10,  1990, p. 92.</p>
<p><sup>7</sup> Cf. Karl Marx, “The Communist Manifesto,” Chapter Two; Ludwig von Mises, “Middle-of-the-Road Policy Leads to Socialism,” in <i>Planning for Freedom and sixteen other essays and addresses, 4</i><i><sup>th</sup></i><i> enlarged edition</i>, South Holland IL: Libertarian Press, Inc., 1980, pp. 18-35.</p>
<p><sup>8</sup> Cf. Mark W. Hendrickson, “Country Economic Policies: What the U.S. Could Learn From Other Countries,” <a href="http://forbes.com/">forbes.com</a>, March 12, 2012, <a href="http://www.forbes.com/sites/realspin/2012/03/12/country-economic-policies-what-the-u-s-could-learn-from-other-countries/2/">www.forbes.com/sites/realspin/2012/03/12/country-economic-policies-what-the-u-s-could-learn-from-other-countries/2/</a>; Alan Reynolds, “Countries That Cut Debt, Taxes And Spending Are Thriving,” posted April 3, 2013 on <a href="http://ibdeditorials.com/">ibdeditorials.com</a>. <a href="http://www.news.investors.com/ibd-editorials-viewpoint/040313-650293-nations-that-lower-debt-cut-taxes-reduce-spending-thrive.htm?ref=SeeAlso&amp;p=2">www.news.investors.com/ibd-editorials-viewpoint/040313-650293-nations-that-lower-debt-cut-taxes-reduce-spending-thrive.htm?ref=SeeAlso&amp;p=2</a></p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iv/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Capital, Capitalists and Capitalism (Part III)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iii/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=capital-capitalists-and-capitalism-part-iii</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iii/#comments</comments>
		<pubDate>Fri, 09 Aug 2013 04:12:17 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[Free-market]]></category>
		<category><![CDATA[law]]></category>
		<category><![CDATA[Legal]]></category>
		<category><![CDATA[Marx]]></category>
		<category><![CDATA[Rights]]></category>
		<category><![CDATA[Socialism]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=199956</guid>
		<description><![CDATA[Rescuing the definition of "capitalism" from the clutches of the Left.]]></description>
				<content:encoded><![CDATA[<p><em><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/stock-footage-woman-s-hand-counts-the-money.jpg"><img class="alignleft size-full wp-image-199957" alt="stock-footage-woman-s-hand-counts-the-money" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/stock-footage-woman-s-hand-counts-the-money.jpg" width="283" height="220" /></a>Editor’s note: The following is the third installment of the FrontPage series “Capital, Capitalists and Capitalism” by Dr. Mark Hendrickson. Click the following for <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/">Part I</a> and <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/">Part II</a>. </em></p>
<p>Capitalism. “The economic system in which all or most of the means of production and distribution&#8230;are privately owned and operated for profit, originally under fully competitive conditions.”<sup>1</sup></p>
<p>Perhaps the greatest difficulty in any discussion about capitalism is overcoming the widely divergent concepts of what <i>capitalism </i>means and settling upon an agreed definition. For the political left, the term <i>capitalism </i>is so heavily laden with negative connotations that leftists have employed it as a label of derision, scorn, and condemnation, if not an outright curse, for more than a century-and-a-half. Karl Marx may be long gone, and the grand socialist experiment in central economic planning widely discredited after the collapse of the USSR two decades ago, but many people still loathe capitalism and yearn for a radical alternative to it. Both the anti-globalization protests of the late 1990s and the Occupy Wall Street movement of the current decade have held demonstrations prominently featuring signs proclaiming, “Kill capitalism!”</p>
<p>The dictionary definition given above is correct as far as it goes, but let’s expand on that definition so that we may increase our chances of engaging in intelligent discussions about it. The late economist Hans F. Sennholz, who earned his doctorate in economics (he also earned one in political science) under Ludwig von Mises and later guided me through my doctorate, preferred the phrase <i>private property order</i> to <i>capitalism</i>.</p>
<p>Indeed, <i>private property order</i> is a less problematical term. First, it describes a real-world political-legal system instead of another contentious ideology, another “-ism.” Second, as stated earlier, all human societies require capital as a factor in economic production, regardless of whether capital is privately or publicly owned. <i>Private property order</i> is a more precise, accurate, and illustrative descriptive term than <i>capitalism</i> as a name for a particular order and organization of economic production.</p>
<p>If we were starting from scratch, I would favor adopting Dr. Sennholz’s term. However, given the left’s constant misuse of the term and leftists’ Orwellian attempt to mutilate the term by bastardizing its definition, it is important to rescue the word from their malign distortions.</p>
<p><i>Free market economy</i> and <i>free enterprise system</i> are two other acceptable alternative terms for the <i>private property order</i> or <i>capitalism</i>. The key distinctions between <i>capitalism </i>and alternative systems involve the role of government and the related question of who is in charge of economic production.</p>
<p>In a truly free market—genuine capitalism—the “means of production and distribution&#8230;are privately owned and operated,” and the government does not tell individuals or companies what to produce, how much to produce, how to produce it, what wages it should pay or what prices it should charge, etc. Under capitalism, the government does not redistribute property from some citizens to others, nor does it pick economic winners and losers in the business world by favoring some with subsidies, bailouts, insulation from competition, etc., or weighing down others with discriminatory taxes, regulatory requirements, and other economic hindrances.</p>
<p>Under capitalism, the proper role of the government is to act as a night watchman, impartially defending everyone’s rights—upholding legal contracts, upholding clearly defined property rights, punishing fraud, theft, etc. To use a metaphor from sports, the government in a capitalistic system plays the role of the referee, enforcing the rules of the game, but does not become an active participant in the economic contest that determines who prospers.</p>
<p>In a free market, all transactions are voluntary. No business can compel anyone to purchase its products or services. Every day, providers of goods and services compete with other providers (actual and potential, within their line of business and between different product choices) for customers. Those providers of goods and services who fail to provide what consumers want at a price consumers are willing to pay either amend their business plan or go broke. Only those providers who excel at fulfilling the most highly valued wants of consumers will survive and prosper.</p>
<p>This is the doctrine of <i>consumer sovereignty</i>. Under capitalism, the consumer sits in the position of the crowd watching Rome’s gladiatorial games, rendering the fateful verdict of “thumbs up” or “thumbs down” on the various business enterprises seeking their approval and patronage in the competitive marketplace.</p>
<p>Ludwig von Mises described <i>consumer sovereignty</i> in these clear, succinct passages: The consumers’ “buying and their abstention from buying decides who should own and run the plants and the land. They make poor people rich and rich people poor. They determine precisely what should be produced, in what quality, and in what quantities.</p>
<p>“The consumers determine ultimately not only the prices of the consumers’ goods, but no less the prices of all factors of production. They determine the income of every member of the market economy.”<sup>2</sup></p>
<p>“All production must bend to the consumers’ will. From the moment it fails to conform to the consumers’ demands it becomes unprofitable. Thus free competition compels the obedience of the producer to the consumer’s will and also, in case of need, the transfer of the means of production from the hands of those unwilling or unable to achieve what the consumer demands into the hands of those better able to direct production. The lord of production is the consumer.”<sup>3</sup></p>
<p>We can plainly see today that government in the United States often abandons the night watchman, impartial referee role, and instead actively intervenes in economic activity. It frequently overrules the preferences of consumers and usurps a significant portion of the sovereign control that consumers wield in a truly capitalistic system.</p>
<p>Interestingly, the political left and right have been in agreement about the injustice of at least one type of government intervention: federal bailouts of big Wall Street firms during the financial crisis a few years ago. Millions of Tea Party and Occupy Wall Street Americans have denounced those bailouts, condemning them as “crony capitalism” or “corporate capitalism.”</p>
<p>This is where the linguistic waters have been muddied. The use of the adjectives<i> crony</i> and <i>corporate </i>is correct, but to use the noun <i>capitalism</i> in this context is utterly incorrect, because in genuine capitalism, government would not intervene to save private corporations from their mistakes. To describe such a clearly non-free-market practice as a form of capitalism is to mutilate the meaning of the word. Neither <i>crony capitalism</i> nor <i>corporate capitalism</i> is capitalism. Linguistically, they are oxymorons; in practice, both are rejections of capitalism, because they denote the replacement of free markets with politically rigged markets.<sup>4</sup></p>
<p>The distortion of words’ meanings can cause great mischief, for by associating <i>capitalism</i> with offensive, non-capitalistic policies, the left believes that capitalism is something pernicious. This can blind them from seeing true capitalism which, when rightly understood and practiced, remedies some of the most serious human problems about which the left professes concern.</p>
<p>Plainly, capitalism in its pure form does not exist today. Government intervenes in economic activity in myriad ways. Perhaps pure capitalism can never be attained, since imperfect human beings are incapable of adhering perfectly to any ideal—although the United States came close to achieving that ideal (at least, for white males) and thus can rightly be said to have been predominantly capitalistic during its first century. Realistically, capitalism may be what Ayn Rand called an “unknown ideal,”<sup>5</sup> but it is an ideal worth striving toward, as we shall now see by comparing capitalism with alternative economic systems in the following subsections.</p>
<p><strong>Read Part IV of this series in the next issue of FrontPage Magazine. </strong></p>
<p><strong>Notes:</strong></p>
<p><sup>1</sup> Webster’s, p. 268.</p>
<p><sup>2</sup> Mises, <i>Human Action</i>, pp. 270-1.</p>
<p><sup>3</sup> Ludwig von Mises, <i>Socialism: An Economic and Sociological Analysis,</i> (trans. J. Kahane), Indianapolis: Liberty Fund/Liberty Classics, 1981, p. 400.</p>
<p><sup>4</sup> To distort the meaning of the word “capitalism” by joining it to an incompatible practice like cronyism is a favorite demagogic tactic of anti-capitalist ideologues. It is the same intellectual deception that they employ when the federal government overrules, suppresses, and prevents the operation of free markets—like it did to cause economic downturns in the 1930s, 1970s, or 2000s—and then, when the inevitable economic dislocations appear, anti-market ideologues blame “the free market” rather than the government intervention that stifled free markets.</p>
<p><sup>5</sup> Ayn Rand, <i>Capitalism: The Unknown Ideal</i>, New York: Signet Books, 1967.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-iii/feed/</wfw:commentRss>
		<slash:comments>6</slash:comments>
		</item>
		<item>
		<title>Capital, Capitalists and Capitalism (Part II)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=capital-capitalists-and-capitalism-part-ii</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/#comments</comments>
		<pubDate>Wed, 07 Aug 2013 04:05:33 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[Capitalist]]></category>
		<category><![CDATA[Marx]]></category>
		<category><![CDATA[Money]]></category>
		<category><![CDATA[profit]]></category>
		<category><![CDATA[workers]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=199650</guid>
		<description><![CDATA[The truth about the much-maligned "capitalists." ]]></description>
				<content:encoded><![CDATA[<p><em><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/wealth-and-money-difference.jpg"><img class="alignleft  wp-image-199651" alt="wealth-and-money-difference" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/wealth-and-money-difference-450x337.jpg" width="315" height="236" /></a>Editor&#8217;s note: The following is the second installment of the FrontPage series &#8220;Capital, Capitalists and Capitalism&#8221; by Dr. Mark Hendrickson. For Part I, click <a href="http://frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/">here</a>. </em></p>
<p>Capitalist. “A person who has capital&#8230;invested in business enterprises.”<sup>1</sup></p>
<p>All societies use capital, so every society has capitalists. They are those who decide who, how, where, and when the various forms of capital are used. In a socialist society, the government controls most of the capital. What socialist and other leftist writers despise are capitalists who have some independence from the state. It is the non-socialist owner of capital—the genuine capitalist rather than his pale socialists imitators—that is our focus in this article.</p>
<p>Anyone who saves part of his income and invests it in a productive enterprise—whether his own, a relative’s, or that of a total stranger via a bank or other financial intermediary—is a capitalist.</p>
<p>Historically, though, the term <i>capitalist</i> referred to entrepreneurs who used capital (either their own or capital borrowed from others) to produce goods and/or services that consumers wanted. Although capital clearly enhanced the productivity of labor, and so gradually raised workers’ wages and standards of living, capitalists themselves rarely have been depicted as heroes. On the contrary, they often have been despised, distrusted, resented, denounced, vilified, and hated.</p>
<p>In the excellent collection of essays <i>Capitalism and the Historians</i>, Bertrand de Jouvenel captured this irony, writing, “Strangely enough, the fall from favor of the money-maker [i.e., the portion of entrepreneurs who proved capable of using capital to earn profits] coincides with an increase in his social usefulness.”<sup>2</sup> Counter-intuitively, the more wealth that capitalists produced and the higher standards of living rose, the more capitalists were cast as villains. This is doubly ironic in light of the contrast between the capitalist era of workers’ rising (however unevenly) standards of living and the pre-capitalist era when laborers were trapped in lives of abject poverty by a rigged, rigid economic system.</p>
<p>Who objected most strongly to the capitalists? It was not, at the outset, their employees, most of whom—though perhaps prone to grumbling about work, as most humans do at one time or another—had at least a dim recognition that capitalist-provided jobs improved their life prospects.</p>
<p>Initially, the attacks against capitalists came primarily from the prosperous, comfortable strata of society—ladies, gentlemen, and aristocrats. In England, the prominent critics of capitalists included William Blake (the poet whose famous poem <i>Jerusalem</i> referred to “those dark, satanic mills”); Blake’s fellow poet, Elizabeth Barrett Browning; the novelist, Charles Dickens, and numerous others who themselves were not members of the laboring class. Notice that these critics were writers. Indeed, the reputation of capitalists was shaped at least in part by the written word, which has proven to be the primary lens through which subsequent generations have perceived the early capitalists.</p>
<p>The recorded criticisms of the early capitalists and their factories are as problematical as they were influential. They were factually correct in certain important particulars, such as the long work hours, often unpleasant, if not deplorable, conditions, and meager wages, but they suffered from two significant defects: They were sorely lacking in context and often based on hearsay rather than first-hand knowledge.</p>
<p>Typical of the latter was Lord Shaftesbury, who (much like Marx and Lenin later on) energetically criticized the factory system while declining invitations to visit mill factories to observe working conditions first-hand.<sup>3</sup> In another stereotypical anecdote, six of nine doctors summoned to testify about child labor and factory conditions before the 1816 Peel Commission (chaired by Robert Peel, the elder, not his son, the eventual Prime Minister) admitted that they had no personal knowledge of factories, but formed their opinions based on hearsay.<sup>4</sup></p>
<p>Individuals who actually had first-hand knowledge of the factories had a more benign sense of them: Physicians with first-hand experience of factory conditions testified that children working in the factories “were at least as healthy as children not employed in factories.”<sup>5</sup> The wages paid to workers in cotton textile factories, “with proper economy and forethought, would enable them to live comfortably&#8230; and the labor of children in those factories generally is light that falls to their share.”<sup>6</sup></p>
<p>In terms of context, the genteel critics of early English capitalists often accused them of taking people away from happy lives in the countryside and plunking them down in noxious factories. In fact, according to a contemporary observer, William Cooke Taylor, “Compared to the factory workers, the agricultural laborers lived in abject poverty, and the work to which country children were put was far more exhausting than factory labor”; furthermore, many children in the countryside starved.<sup>7</sup></p>
<p>The economist Ludwig von Mises explained the actual situation thusly: “The factory owners did not have the power to compel anybody to take a factory job. They could only hire people who were ready to work for the wages offered to them. Low as these wage rates were, they were nonetheless much more than these paupers could earn in any other field open to them. It is a distortion of facts to say that the factories carried off the housewives from the nurseries and the kitchens and the children from their play. These women had nothing to cook with and to feed their children. These children were destitute and starving. Their only refuge was the factory. It saved them, in the strict sense of the term, from death by starvation.”<sup>8</sup></p>
<p>Population data from that era tend to corroborate Mises’ assertion. The death rate of London children under the age of five was 74% from 1730 to 1750, before the advent of the factory system. Two generations later, from 1810 to1830 when the factory system was well established, that death rate had fallen below 32%. The population of England doubled from 1752 to 1820—striking evidence of longer life expectancy.<sup>9</sup></p>
<p>In what hindsight shows to have been a strategic error, the early capitalists did not mount a vigorous defense against the lurid, fallacious charges of their critics. The economist W.H. Hutt thought that the reason for this was that “the mill owners were, if anything, apathetic toward the anti-factory propaganda” because they didn’t think it was possible that people would be gullible enough to believe the absurdly exaggerated claims.<sup>10</sup></p>
<p>The factory workers themselves did not leave much of a written record of their thoughts about capitalists, but it is significant how they “voted with their feet.” They freely flocked to factories seeking employment, much as people in Third World countries form blocks-long lines to apply for jobs in sweatshops today.<sup>11</sup> We can infer from this that factory work offered these people an improvement in their quality of life. Also, “If the British workers really thought they were being unfairly abused by capitalists, why did they not embrace en masse the Marxist message of exploitation that was current in Britain in the mid-19<sup>th</sup> century?”<sup>12</sup></p>
<p>Granted, life for workers employed by capitalists often has been difficult, especially in the earlier stages of economic development; and yes, some capitalists undoubtedly have been mean and nasty (and so have some intellectuals), but the overall impact of capitalists on workers has been to increase their survival rates and longevity and to raise their standard of living.</p>
<p>That is the big picture. Up close and personal, holding a positive opinion of an individual capitalist can be challenging. Whatever the overall benefit of capitalists in general may be, it is easy to despise a capitalist who seems remote, uncaring, and, most of all, stingy in compensating his employees.</p>
<p>The public perception of capitalists in the United States during the golden age of entrepreneurial capitalist titans (roughly 1875 to 1925) was quite mixed. Some workers respected, and even loved, their capitalist employers. One notable example of this was George Westinghouse, who treated employees with uncommon kindness, generosity, and dignity.<sup>13</sup> Other capitalists were despised and resented by their employees. The poster child for this group is Andrew Carnegie.<sup>14</sup></p>
<p>Let us, for the sake of argument, concede that all the capitalists in the past were unnecessarily stingy toward their workers and paid them far less than they could have. By paying workers less, they were able to sell their products for lower prices. Lower prices for consumer goods makes goods more affordable, so part of what workers didn’t receive as wages, they received in the form of lower consumer prices. There were other social benefits, too, to the enormous profits earned by the mega-capitalists. The more profits they earned, the faster the social stock of capital accumulated. True, many capitalists indulged in large mansions and other luxury items (which, by the way, provided employment for workers who built and made those goods). But the most successful capitalists—the ones who employ large numbers of workers and make enormous fortunes supplying goods for the masses—couldn’t possibly consume most of their wealth. They saved millions, and the society’s stock of capital accelerated. This not only increased the productivity, wages, and standard of living of workers, but also provided capital for additional entrepreneurial ventures that increased employment opportunities for workers.</p>
<p>Like it or not, we living today are as affluent as we are because of the profits (capital) that those earlier capitalists did not pay out in wages to their employees. The low wages of the past contributed to the higher wages of today—hence, the hypocrisy of today’s intellectuals condemning long-dead capitalists even as they enjoy the benefits of their financial decisions.</p>
<p>The problem with the animus against capitalists is that those who denounce them are living in the past. The world has changed and rendered their objections moot. The salient fact of life that the anti-capitalists need to recognize today is that the conditions that made Andrew Carnegie’s stingy wages possible no longer exist.</p>
<p>Virtually all 19<sup>th</sup>-century capitalists had their employees over a barrel. Thanks to the pitiless, inexorable law of supply and demand, wages were low. The prevailing economic reality was that the supply of labor was abundant relative to the supply of capital. For capitalists, it was a buyer’s market. If Smith wasn’t willing to work for the wages offered, it didn’t matter, because Jones, Miller and Johnson were waiting in line to jump at the same opportunity.</p>
<p>Andrew Carnegie might have squeezed every penny he could out of his workers, but what enabled him to do so was the combination of a large supply of workers (not Carnegie’s fault) and the small number of capitalists wanting to hire workers in Pittsburgh (also not Carnegie’s fault). The main reason that workers wages did not rise faster than they did was not because capitalists like Carnegie were exploitative, but because there were not enough capitalists present to “exploit” (employ) all the workers who wanted jobs.</p>
<p>It is a basic economic fact of life that the law of supply and demand cuts both ways. While it leads to low wages when there is less demand for labor than the supply of workers, it also pushes wages higher when the demand for workers is high relative to the available supply of workers. In a market economy, if one wants workers’  wages to rise, one should not favor the abolition of capitalists, but the multiplication of capitalists. That would increase the competitive demand for workers relative to supply, and thus bid wages higher.<sup>15</sup></p>
<p>At some point during the 20<sup>th</sup> century, a tipping point was passed. So many capitalist entrepreneurs arose that workers were no longer at the mercy of a small number of Carnegies, and workers’ incomes continued to rise, bringing a comfortable life of affluence within the reach of the vast majority of Americans. The middle-class standard of living enjoyed by millions of workers today includes modern conveniences that would be the envy of the kings and queens of just a few generations ago.</p>
<p>As wealth has multiplied, new industries have arisen from new technologies, and the financial industry that finances them has enjoyed explosive growth. A wide array of capitalist firms now provides more financial options than ever before. Today, unknown, would-be entrepreneurs have more opportunities to obtain funding than ever before. The result will be new products, services, and innovations that will enrich our lives in ways we can’t anticipate.</p>
<p>What has evolved over the last century is a democratization of capital. In fact, this important development largely removes one of Marx’ major objections to capitalists. Marx felt it was unfair that a laborer had to work for a capitalist and share his income with a capitalist “parasite.”<sup>16</sup> The democratization of capital and credit makes it possible for workers themselves to obtain capital to go into business for themselves, thereby freeing himself from so-called “exploitation” by an employer.</p>
<p>Despite the inevitable phenomenon of “bad apples,”  capitalists have played an indispensable, crucial role in helping our society advance to its present state of affluence. Today, though, it has become fashionable to denounce capitalists and capitalism itself due to the Big Bailout of Wall Street in 2008-9 and the obvious privileged treatment that some capitalist firms receive from Washington. Before condemning capitalists as a class, though, please recognize that those financiers and businesspersons who benefit from government intervention are not genuine capitalists, but counterfeits of capitalists. Genuine capitalists earn (or lose) their money in free, competitive markets where transactions and contracts are voluntary and capitalists have no power to rig the laws and regulations to guarantee profits for themselves. Those who receive bailouts and owe their financial success to government intervention are not true capitalists, and they are engaged in the sordid process of political rent-seeking, not in the practice of authentic capitalism. What is authentic capitalism? That will be explained in the following installments of this series.</p>
<p><strong>Read Part III of this series in the next issue of FrontPage Magazine. </strong></p>
<p><strong>Notes:</strong></p>
<p><sup>1</sup> <a href="http://www.dictionary.reference.com/browse/capitalist">www.dictionary.reference.com/browse/capitalist</a></p>
<p><sup>2</sup> Bertrand de Jouvenel, “The Treatment of Capitalism by Continental Intellectuals,” in F.A Hayek, ed., <i>Capitalism and the Historians</i>, Chicago, The University of Chicago Press, First Phoenix Edition, 1963, p. 109.</p>
<p><sup>3</sup> W.H.Hutt, “The Factory System of the Early Nineteenth Century” in Hayek, ed., <i>Capitalism and the Historians</i>, The University of Chicago Press, 1954, fn. 51, p.175.</p>
<p><sup>4</sup> ibid., p. 163.</p>
<p><sup>5</sup> Ibid., p. 164.</p>
<p><sup>6</sup> Dr. Phillip Gaskell, a first-hand observer writing in the 1830s, quoted in ibid., p. 167-8.</p>
<p><sup>7</sup> ibid, p. 176.</p>
<p><sup>8</sup> Ibid., p. 615.</p>
<p><sup>9</sup> Christopher Crennen, “The Wealth of Nations: An Inquiry Into the History and Morality of Socialism and Capitalism,” DVD; Cinematic Creations, LLC, 2005.</p>
<p><sup>10</sup> Hutt, p. 177.</p>
<p><sup>11</sup> <a href="http://factsanddetails.com/world.php?itemid=2132&amp;catid=57&amp;subcatid=383">factsanddetails.com/world.php?itemid=2132&amp;catid=57&amp;subcatid=383</a></p>
<p><sup>12</sup><a href="http://en.wikipedia.org/wiki/History_of_socialism_in_Great_Britain#Marx_and_early_Marxism">en.wikipedia.org/wiki/History_of_socialism_in_Great_Britain#Marx_and_early_Marxism</a></p>
<p><sup>13</sup> “Westinghouse: Minutes of History,” (DVD) Mark Bussler, Director, Inecom Entertainment Company, 2008.</p>
<p><sup>14</sup> Raymond Lamont-Brown, <i>Carnegie ‘The Richest Man in the World</i>,’ Gloucestershire, U.K.: Sutton Publishing, 2005, pp. 131, 147.</p>
<p><sup>15</sup> Mark W. Hendrickson, “In Praise of Capitalist Exploitation,” <a href="http://www.visionandvalues.org/author/mark-w-hendrickson/">www.visionandvalues.org/author/mark-w-hendrickson/</a>, March 27, 2009.</p>
<p><sup>16</sup> Eugen von Bohm-Bawerk, <i>Karl Marx and the Close of His System</i>, New York, Augustus M. Kelley, 1949, p. 14.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-ii/feed/</wfw:commentRss>
		<slash:comments>1</slash:comments>
		</item>
		<item>
		<title>Capital, Capitalists and Capitalism (Part I)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=capital-capitalists-and-capitalism-part-i</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/#comments</comments>
		<pubDate>Tue, 06 Aug 2013 04:25:56 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Capitalism]]></category>
		<category><![CDATA[Communist]]></category>
		<category><![CDATA[Conservative]]></category>
		<category><![CDATA[Marx]]></category>
		<category><![CDATA[Money]]></category>
		<category><![CDATA[Socialist]]></category>
		<category><![CDATA[wealth]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=199358</guid>
		<description><![CDATA[Reclaiming the language of freedom and prosperity. ]]></description>
				<content:encoded><![CDATA[<p><b><span class="Apple-style-span" style="font-weight: normal;"><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/120905055240-money-bills-story-top.jpg"><img class="alignleft  wp-image-199359" alt="120905055240-money-bills-story-top" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/08/120905055240-money-bills-story-top-450x330.jpg" width="270" height="198" /></a><strong>Introduction:</strong> It is difficult to think of terms in the realm of political economy that are less understood and more controversial than<i> capital</i>, <i>capitalist</i>, and <i>capitalism</i>. For the political right, these terms connote liberty, prosperity, opportunity, and the American Dream. For the political left, these words represent evil and injustice. Indeed, so vehement and hate-filled have been the condemnations of <i>capital</i>, <i>capitalist,</i> and <i>capitalism</i> over the years that the words themselves have been stripped of their objective lexicographical definitions. This hinders honest dialogue and renders rational debate nearly impossible. It seems that libertarians and conservatives on the one side, and liberals and other statists on the other, inhabit parallel mental universes in which the same words represent vastly different concepts.</span></b></p>
<p>An erstwhile socialist, I now am firmly in the camp of those who think these three c-words are honorable and worth vigorously defending against the ignorant and/or malicious attacks against them. The political left is comprised of individuals who, for a combination of psychological and ideological reasons, crave power over others. Seeking relentlessly to expand government power over individual lives, liberty, and property, leftists employ the scurrilous tactics of caricature, distortion, and Orwellian mutilation to disgrace these terms so that they can more effectively advance their agenda.</p>
<p>What I propose to do in the following 6-part series is to rescue and rehabilitate these three important terms from those who wish to permanently discredit them. Preventing the left from neutralizing our verbal tools by redefining beyond recognition is a necessary task in the struggle to halt their attempts to replace individual rights and liberty, and its economic corollary of the “invisible hand” described by Adam Smith with the heavy hand of government tyranny implemented by taking control over human economic activity.</p>
<p>Let’s get the easy term out of the way first. In fact, since <i>capital</i> is the root of the other two terms, it is the logical starting point anyhow.</p>
<p><b>Capital</b></p>
<p>Capital. “&#8230;In political economy, the product of industry which remains&#8230;after a portion of what is produced is consumed, and which is still available for further production.”—Webster<sup>1</sup></p>
<p>“Cash or goods used to generate income”—InvestorWords.com<sup>2</sup></p>
<p>Compared to<i> capitalists</i> and<i> capitalism</i>, <i>capital</i> is a term that should be relatively uncontroversial and the easiest for us to agree upon an objective definition for it. In its fundamental economic sense, capital is simply one of the factors of production—along with land (natural resources) and labor—that entrepreneurs or managers (whether singular or plural, private or public sector) employ in the production of goods and services. <i>Capital </i>is, or at least should be, a value-free word. It is no more &#8220;good&#8221; or &#8220;evil&#8221; than nouns like &#8220;rock&#8221; or &#8220;river,”<sup>3</sup> or, more to the point, like “tools,” “machines,” or “equipment”—the various types of capital goods of which capital itself is the more liquid, elemental form.</p>
<p>Whether we are talking about financial capital or the capital goods into which financial capital is translated, capital comes from wealth that has been produced but not consumed. Economists sometimes refer to capital as the “produced means of production.”  The classic classroom example of capital is the farmer’s seed corn—the part of this year’s crop that isn’t consumed, but saved for producing future crops. Capital is the produced wealth that is saved so that it can be employed in producing goods and services for future consumption.</p>
<p>In a free society, capital comes either from the savings of individuals or the profits of business enterprises—in either case, from the surplus of income over expenses. In a society where the state controls some or all of the decisions about what and how much is produced, the state appropriates wealth from the private sector to obtain the capital for state-financed projects.</p>
<p>Regardless of the governmental system under which humans live, until we learn where to find daily manna or how to feed over 5,000 people with a few loaves and fishes, it will remain true that every society, without exception, needs capital in order to survive and prosper. It doesn’t matter whether one favors socialism or free markets or some mixture of the two; it is an inescapable fact that people either accumulate and use capital, or languish in economic primitivism and poverty.</p>
<p>The old Marxian notion that capital is the enemy of working people is belied by a simple, undeniable truism: “A country becomes more prosperous in proportion to the rise in the invested capital per capita.”<sup>4</sup> Without capital at their disposal, workers’ productivity remains low. The historical record shows that increases in wages and standards of living rise are driven by increases in the productivity of labor. In turn, the primary driver of the productivity of labor is how much capital labor has at its disposal.<sup>5</sup></p>
<p>A ditch-digger who uses a backhoe not only moves more dirt per hour and consequently receives more pay, but he also is freed from the backbreaking exertions that a worker equipped only with a shovel must endure. Capital liberates labor from many forms of drudgery. A socialist regime may enforce strict economic equality and so fulfill a socialist theory of justice, but no government can legislate or decree wealth without capital and capital goods to multiply the productivity of labor, any more than a human being can travel at 75 mph or lift a ton of matter using only his own power.</p>
<p>Many critics believe that capital and labor are irreconcilable enemies—that capital evilly exploits labor and keeps workers poor. How then, does one explain the fact that the countries that have the highest capital per capita invested are the countries where the standards of living are highest or whose economies are growing at the fastest rates? The poorest countries are not those where capital is abundant, but where it is most scarce. Every year I break the “bad news”  to my Econ 101 students that we Americans have been “exploited”  by capital to a greater extent than any other people in the history of the world. It is tragicomic that leftist professors apparently can’t see the irony and idiocy of teaching their students that capital is rapacious, dehumanizing, and destructive when, in fact, more capital has been invested in the USA than any other country in the world and that the USA also happens to be the most affluent country in history.</p>
<p>Poor people in Third World countries don’t share American professors’ disdain for capital; on the contrary, although they may not understand the underlying economics, their daily hope and prayer is that they themselves some day will be “exploited”  (enriched) even one-tenth as much as we have been.</p>
<p>Just as foreign capital helped to make us the richest country in the world, so today the astounding explosion of wealth in China is turbo-charged by the jet fuel of FDI (Foreign Direct Investment), i.e., foreign capital, added to China’s considerable supply of domestically accumulated capital. Although China is still nominally a Communist state and far from being a free society, their Communist Party leaders are unmistakably—indeed, emphatically—pro-capital. This stands in marked contrast to Barack Obama’s hostility to capital formation as manifested in his hostility to profits, one of the major sources of capital accumulation. Unfortunately, the hostility and misunderstanding that surround the terms <i>capitalist</i> and <i>capitalism</i> often rubs off on the neutral, objective term <i>capital</i>. The remainder of this series will try to rescue and rehabilitate those two tortured terms.</p>
<p><strong>Read Part II of &#8220;Capital, Capitalists and Capitalism&#8221; in the next issue of FrontPage Magazine. </strong></p>
<p><strong>Notes:</strong></p>
<p><sup>1</sup> <i>Webster’s Deluxe Unabridged Dictionary</i>, Second Edition, (c) Simon &amp; Schuster, 1983, p. 268.</p>
<p><sup>2</sup> <a href="http://www.investorwords.com/694/capital.html">www.investorwords.com/694/capital.html</a></p>
<p><sup>3</sup> Craig Columbus &amp; Mark W. Hendrickson, <i>God &amp; Man on Wall Street—The Conscience of Capitalism</i>; New York; Brick Tower Press, 2012, p. 18.</p>
<p><sup>4</sup> Ludwig von Mises, <i>Economic Policy</i>, South Bend: Regnery/Gateway, Inc., 1979; p. 14.</p>
<p><sup>5</sup> F.A. Harper, <i>Why Wages Rise</i>, Irvington, NY: The Foundation for Economic Education, Inc., 1957; pp. 14-34.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/capital-capitalists-and-capitalism-part-i/feed/</wfw:commentRss>
		<slash:comments>43</slash:comments>
		</item>
		<item>
		<title>Obama and Marx’s Ten-Point Platform (Part II)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-ii/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=obama-and-marxs-ten-point-platform-part-ii</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-ii/#comments</comments>
		<pubDate>Thu, 01 Aug 2013 04:45:09 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Left]]></category>
		<category><![CDATA[Marxism]]></category>
		<category><![CDATA[Obama]]></category>
		<category><![CDATA[Socialism]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=198346</guid>
		<description><![CDATA[The president's Marxian policies unveiled.]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/07/Obama-Karl-Marx1.jpg"><img class="alignleft size-full wp-image-198463" alt="Obama-Karl-Marx" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/07/Obama-Karl-Marx1.jpg" width="300" height="300" /></a>Having gone over, in <a href="http://frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-i/">Part One</a>, how far President Obama has gone to implement the first five of Marx’s ten points for how to convert a society to socialism, let’s pick up the narrative by reviewing the other five points.</p>
<p><strong>#6. State control of means of communication and transportation.</strong></p>
<p>Team Obama has attempted to cow conservative media outlets like Fox News into submission through denunciation, has suggested reviving the so-called “fairness doctrine,” and has expressed hostility toward <a href="http://www.visionandvalues.org/2011/03/who-objects-to-free-speech/">free speech</a>, seeking to use regulations to shape and limit the public. In the area of transportation, Obama insinuated government into the auto industry, has favored the high-speed rail boondoggle, and wishes he could compel us all to convert to “green transportation,” such as electric cars and biofuels.</p>
<p><strong>#7. Increase state control over means of production.</strong></p>
<p>Besides increasing government control of financial institutions (including having virtually nationalized the mortgage industry by taking over Fannie Mae and Freddie Mac) Obama has moved to centralize control of health care and insurance; has dictated policies, and even hand-picked a CEO, of American automobile companies; and has done his best to increase government power over the energy industry through his green energy subsidies, his failed cap-and-trade scheme, and via EPA regulation.</p>
<p><strong>#8 Establishment of workers’ armies.</strong></p>
<p>Obama has ramped up the number of Americans working for Uncle Sam by securing a large expansion of Americorps and winning passage of his Serve America Act. He also has done everything he could to strengthen labor unions.</p>
<p><strong>#9. Control over where people live.</strong></p>
<p>Under Obama, The Department of Housing and Urban Development has launched a plan to change where some people live to achieve an indefinite goal of a more even racial distribution of the population.[1]</p>
<p>One of the implications of cap &amp; trade or other attempts by Obama to regulate how much carbon dioxide Americans emit via fossil fuel consumption is the prospect of government limiting human mobility by raising the cost (even to the extent of imposing financial penalties) for exceeding government-determined limits on how far a person may travel.</p>
<p>In Brian Sussman’s book, <i>Eco-Tyranny</i>, you can read an executive order that Obama signed on October 5, 2009 that would “divide the country into sectors where all humans would be herded into urban hubs” while most of the land would be “returned to a natural state upon which humans would only be allowed to tread lightly.” (Marx wanted more equal distribution of the human population between town and country, whereas Obama favors urban concentration, but both want to control where people live.)</p>
<p><strong>#10. Education for all children in public (i.e, governmentally controlled) schools.</strong></p>
<p>Marx’s tenth point is the most far-reaching and potentially dangerous of all. It’s target—control over how and what people think—is the ultimate tyranny. That is why every communist state uses schools as institutions of indoctrination, just as they use media outlets as instruments of propaganda. That is why George Orwell featured “Newspeak”—the mutilation of truth and reason by distorting the meanings of concepts. Every illiberal regime seeks to impose mental programming that produces “the new Soviet man.”</p>
<p>Obama has done more than any previous president to centralize control over education in Washington. He has essentially nationalized the student loan market.[2] He has repeatedly tried to limit school choice, instead siding with would-be teachers’ union monopolists.</p>
<p>In his <a href="http://www.visionandvalues.org/2012/01/the-state-of-the-union-an-inside-report/">2012 State of the Union address</a>, which I attended, he called for additional funds for new federal education programs, including mandatory nationwide schooling for everyone up to age eighteen, regardless of aptitude, interest, or willingness.</p>
<p>Obama has sought to extend the tentacles of federal control over how state education policies by <a href="http://www.americanthinker.com/2012/02/there_he_goes_again_obamas_waivers_to_the_no_child_left_behind_act.html">arbitrarily granting waivers</a> exempting some states from George W. Bush’s misguided No Child Left Behind Act. In doing so, Obama has trampled on the principle of federalism and most assuredly granted waivers with strings attached, thereby reducing states’ independence.</p>
<p>Most recently, Team Obama has been pushing the Common Core State Standards—a follow-up to his “Race to the Top” program that spent over $4 billion to induce states to switch to federal standards for curricular guidelines. While Race to the Top and Common Core may sound innocuous or even reasonable, the actual effects are deleterious. Both programs essentially bribe states to replace their existing standards with federal standards, even though, as California has found out, states have had to “dumb down” their standards to conform to federal standards that are lower. [3]</p>
<p>More ominously, the Obama administration is using the Common Core program to invade privacy (think NSA, IRS, and the CFPB &#8212; see <a href="http://frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-i/">Part One</a> of this article). In 2011, the Department of Education unilaterally, without congressional approval, altered the regulations based on the Federal Education Rights and Privacy Act of 1974—loosening them so that mounds of personal data about students may be collected. The personal data include not just academic records, such as grades and whether students complete homework assignments, but also disciplinary records, Social Security numbers, records of discussions with school counselors, as well as information about families’ voting status, religious affiliations, medical history, and income.</p>
<p>As the obnoxious cable TV commercials say, “But wait, there’s more!” If that isn’t invasive enough, the intrepid Michelle Malkin has reported that Team Obama’s Department of Education is preparing to use the most advanced technologies (e.g., cameras to judge facial expressions, electronic seats that report posture, a pressure-sensitive computer mouse, biometric wraps on wrists, etc.) to assess a wide variety of student attitudes—“appreciation for diversity,” “empathy,” “bias,” “cultural awareness,” etc.[4]</p>
<p>You can imagine the mischief to which such data-mining could be put—a “brave new world” in which the government uses the data collected in schools to single out “right thinkers” for the fast track to the best schools and key government positions, and putting dissidents from the desired orthodoxy on black lists. You can see the totalitarian potential of such data mining performed under the pretext of “education.” Surely Comrade Marx would commend Barack Obama for his diligent efforts in the field of education.</p>
<p>The bottom line in all of this is that if Barack Obama is not an economic Marxist at heart, he is doing a superb imitation of one. The fact that he enjoys such unflagging support for his agenda from a significant part of the population shows just how far our country has gone in forsaking our founding principles for the siren song of socialism.</p>
<div><strong>Notes:</strong></p>
<hr align="left" size="1" width="33%" />
<div>
<p>[1] “HUD Launches Scheme To Racially Diversify Suburbs,” IBD Editorials, posted 07/22/2013 06:55 PM ET.</p>
</div>
<div>
<p>[2] Andrew Clark, “”Obama’s Risky Plan: Government Takeover of the Student Loan Business,” Politics Daily, January 26, 2010; www.politicsdaily.com/2010/01/26/obamas-risky-plan-takeover-of-the-student-loan-busi/</p>
</div>
<div>
<p>[3] Mytheos Holt, “New Whiteboard Video Attacks ‘Obama’s Education Takeover,’” theblaze, Feb. 17, 2012; <a href="http://www.theblaze.com/stories/2012/02/17/new-whiteboard-video-attacks-obamas-education-takeover/">www.theblaze.com/stories/2012/02/17/new-whiteboard-video-attacks-obamas-education-takeover/</a></p>
</div>
<div>
<p>[4] Michelle Malkin, “Time To Opt Out of Creepy Fed Ed Data-Mining Racket,” Accuracy In Media guest column, posted March 18, 2013 @ 2:50 am; <a href="http://www.aim.org/guest-column/time-to-opt-out-of-creepy-fed-ed-data-mining-racket/">http://www.aim.org/guest-column/time-to-opt-out-of-creepy-fed-ed-data-mining-racket/</a></p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref%3dnb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n:133140011%2ck:david+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n:133140011%2ck:david+horowitz&amp;sort=daterank" target="_blank">Click here</a>.  </strong></p>
</div>
</div>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-ii/feed/</wfw:commentRss>
		<slash:comments>57</slash:comments>
		</item>
		<item>
		<title>Obama and Marx’s Ten-Point Platform (Part I)</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-i/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=obama-and-marxs-ten-point-platform-part-i</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-i/#comments</comments>
		<pubDate>Wed, 31 Jul 2013 04:55:16 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[economic agenda]]></category>
		<category><![CDATA[Left]]></category>
		<category><![CDATA[Marx]]></category>
		<category><![CDATA[Obama]]></category>
		<category><![CDATA[Socialism]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=198344</guid>
		<description><![CDATA[Just a coincidence? ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/07/Obama-Karl-Marx.jpg"><img class="alignleft size-full wp-image-198460" alt="Obama-Karl-Marx" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/07/Obama-Karl-Marx.jpg" width="300" height="300" /></a>It can be startling to realize how much of Karl Marx’s ten-point platform to socialize an economy (set forth in Chapter Two of “The Communist Manifesto”) has been implemented in the United States. I even wrote a book about it in 1987.[1] Never before Barack Obama’s presidency, however, has a president pushed so assiduously to advance all ten points in Marx’s plan. Is it just a coincidence that Obama’s mentor, Frank Marshall Davis, was a card-carrying Communist and that Obama gravitated toward radicals such as alleged Cuban agent of influence Bill Ayers? Or, as the following synopsis shows, is Obama’s economic agenda is actually Marxist?</p>
<p>This cursory examination of Obama’s Marxian policies will be presented in two parts. The first part below will cover Marx’s first five points, and Part Two will review the second five points. The two planks in Marx’s platform that pose the greatest threat today are Numbers Five and Ten, so I will cover those in greater detail.</p>
<p>Here is a brief summary, with Marx’s wording being edited for simplicity’s sake:</p>
<p><strong>#1. State control of territory.</strong></p>
<p>On repeated occasions, Team Obama often has thwarted the development of domestic energy supplies through arbitrary regulatory control over massive tracts of federally owned land and restricting drilling in American waters off our coasts.</p>
<p><strong>#2. Progressive income taxes.</strong></p>
<p>Obama has an Ahab-like obsession with further raising taxes on “the rich” even though the top 1% of earners already pays almost as much of the federal income tax as the bottom 95% of taxpayers combined.[2]</p>
<p><strong>#3. Abolition of inheritance.</strong></p>
<p>Obama has succeeded in reinstating federal inheritance taxes and recently proposed raising them further by reducing the dollar threshold at which the tax kicks in and no longer allowing that amount to be indexed to inflation.[3]</p>
<p><strong>#4. Confiscation of the property of emigrants and rebels. </strong></p>
<p>The US has long been one of the few countries to tax its citizens on income earned abroad (a tax that applies to incomes above $95,100). In 2010, Obama won passage of the Foreign Account Tax Compliance Act, which orders foreign financial institutions to provide information to the IRS about Americans’ offshore holdings.</p>
<p><strong>#5. Centralization of the country’s financial system in the hands of the state.</strong></p>
<p>Certainly this trend was well established before Barack Obama became president. Thanks to decades of deficit spending, enabled by an accommodating central bank willing to help underwrite the federal government’s chronic over-spending, Big Government and Big Finance have become joined at the hip. This was dramatically demonstrated in 2008 when George W. Bush gave his blessing to a federal bailout of Wall Street. By that time, the heavily indebted federal government had grown far beyond Main Street banks’ ability to finance its massive fiscal operations. Only the colossal financial infrastructure of the megabanks and other gigantic financial institutions was sufficient to maintain an orderly market for the federal Treasury’s seas of red ink, and so federal intervention to rescue Wall Street was an inevitable act of self-preservation on the part of Uncle Sam.</p>
<p>Yet, even though in some ways Obama is merely continuing in the direction charted by his predecessors, he has found a way to accelerate the centralization of credit in the hands of the state. I am referring to the 2010 Dodd-Frank bill—both its content, which Obama supported, as well as the aggressive ways in which he is having it implemented.</p>
<p>Dodd-Frank established the Consumer Financial Protection Bureau and designed it in such a way that its director would be completely unaccountable to congressional or judicial review while giving the director the power to set its own budget. It is difficult to imagine a less democratic, more autocratic power than that wielded by the director of the CFPB. The word “czar” has been used to describe certain presidential appointees, but the CFPB director has such broad powers and is so insulated from checks and balances that the description “czar” seems to be literally true.</p>
<p>While the stated purpose of Dodd-Frank was to reduce dangerous degrees of financial leverage, the larger import of the bill is the way it increases the government’s political leverage over a wide range of financial firms. President Obama, Sen. Dodd, and other supporters of the bill assured us that this law would protect Americans from the financial fallout of major bankruptcies by authorizing federal regulators to shut down financial institutions “in an orderly fashion” when they start to fail, or to bail them out. [Although Obama himself insisted that Dodd-Frank didn’t contain bailout provisions, two members of the president’s own party did. Sen. Ted Kaufman (D-Del.) stated that the bill expands “the safety net … to cover ever-larger and more complex institutions heavily engaged in speculative activities,” thereby “sowing the seeds for an even bigger crisis.” Rep. Brad Sherman (D-Calif.) categorically declared, “The bill contains permanent bailout authority.”][4]</p>
<p>Such life and death power, of course, gives the CFPB tremendous leverage over financial institutions. It doesn’t require a lot of imagination to anticipate how such immense power could be used as leverage (what in the private sector might be called “extortion”): “Listen, Ms. CEO, the guys at Treasury think you should do A, B, and C. You’re free to do what you want, but if you don’t do what they suggest, we at the CFPB may pull the plug on you. On the other hand, make them happy and they’ll name you ‘systemically important.’” The Dodd-Frank law has the potential to make vassals and serfs out of all financial institutions, which is exactly what Karl Marx wanted.</p>
<p>Lest you think Barack Obama wouldn’t use the powers of the CFPB to promote his own agenda, he couldn’t even wait until the director of CFPB, Richard Cordray, was duly confirmed (which the Senate finally did earlier this month) before the abuses started. As reported by Paul Sperry in Investor’s Business Daily on July 3, the Obama administration already was using the CFPB to “compil(e) a massive database of personal information” about “your bill-paying and spending habits.”[5] In the context of a presidential administration that already has given ominous indications of being of the Big Brother type (e.g., NSA and IRS data collection) it seems that the Obama administration is moving in the direction not only of total financial control over financial institutions, but over all of us as individuals, too.</p>
<p><strong>[To be continued in Part Two]</strong></p>
<div>
<p><strong>Notes:</strong></p>
<hr align="left" size="1" width="33%" />
<div>
<p>[1] Mark W. Hendrickson, <i>America’s March Toward Communism</i>, Libertarian Press, 1987.</p>
</div>
<div>
<p>[2] Mark J. Perry, “The top 1% of US taxpayers pay almost as much in federal income taxes as the entire bottom 95%, and half of that bottom group paid no taxes at all in 2010,” Carpe Diem blog, December 27, 2-12, 11:37 am;<br />
<a href="http://www.aei-ideas.org/2012/12/top-1-of-american-taxpayers-pay-almost-as-much-in-taxes-as-bottom-95-and-half-of-that-group-paid-nothing-in-2010/">http://www.aei-ideas.org/2012/12/top-1-of-american-taxpayers-pay-almost-as-much-in-taxes-as-bottom-95-and-half-of-that-group-paid-nothing-in-2010/</a></p>
</div>
<div>
<p>[3] http://www.investmentnews.com/article/20130411/FREE/130419987#</p>
</div>
<div>
<p>[4] Mark W. Hendrickson, “Sen. Dodd’s Financial Reform Bill: The Problem of Leverage,” posted on Visionandvalues.org, April 28, 2010; <a href="http://www.visionandvalues.org/2010/04/sen_dodd_s_financial_reform_bill/">www.visionandvalues.org/2010/04/sen_dodd_s_financial_reform_bill/</a></p>
</div>
<div>
<p>[5] Paul Sperry, “bama Credit Watchdog Snoops Personal Financial Data,” IBD Editorials, posted on investors.com, 07/03/2013 6:59 PM ET.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref%3dnb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n:133140011%2ck:david+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n:133140011%2ck:david+horowitz&amp;sort=daterank" target="_blank">Click here</a>.  </strong></p>
</div>
</div>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/obama-and-marxs-ten-point-platform-part-i/feed/</wfw:commentRss>
		<slash:comments>61</slash:comments>
		</item>
		<item>
		<title>The Lame-Brain Oil Divestment Campaign</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/the-lame-brain-oil-divestment-campaign/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-lame-brain-oil-divestment-campaign</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/the-lame-brain-oil-divestment-campaign/#comments</comments>
		<pubDate>Thu, 18 Jul 2013 04:25:34 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Bill McKibben]]></category>
		<category><![CDATA[Climate Change]]></category>
		<category><![CDATA[divestment]]></category>
		<category><![CDATA[Environmentalism]]></category>
		<category><![CDATA[fossil fuel]]></category>
		<category><![CDATA[Global Warming]]></category>
		<category><![CDATA[OIL]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=196960</guid>
		<description><![CDATA[The disturbing growth of an up-and-coming movement leading America to ruin. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/07/Tufts-student-activists-divestment-CC-James-Ennis2013-628x314.jpg"><img class="alignleft  wp-image-196963" alt="Tufts-student-activists-divestment-CC-James-Ennis2013-628x314" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/07/Tufts-student-activists-divestment-CC-James-Ennis2013-628x314.jpg" width="247" height="188" /></a>Perhaps you have heard that there is a small but growing campaign calling for colleges, other institutions, and individuals to divest themselves of any investments in fossil fuel companies.</p>
<p>When I first heard of it, I thought, “How extraordinary! Surely no moderately intelligent person (which, presumably, would include college populations) could be ignorant of the indispensable role that fossil fuels have played in enabling and continue to play in sustaining modern standards of living.” But then two incidents prompted me to take a closer look at this phenomenon.</p>
<p>First, I received an email from a Vassar student, asking me to sign a petition requesting American colleges to “educate students about fossil fuels.” At Vassar, guest speakers about the benefits of fossil fuels are <a href="http://www.nationalreview.com/corner/344684/whats-matter-vassar-stanley-kurtz">persona non grata</a>. Then, a dear cousin of mine, still a political activist in his 70s, forwarded an email to me, urging me to “start or join a local divestment effort.”</p>
<p>The email from my cousin contained a link to a May 17 radio interview with Bill McKibben, who hatched the fossil fuel divestment movement, so I checked it out. What I found was embarrassingly inane. Upon reflection, though, rather than simply dismissing the divestment campaign as a tiresome nuisance or the latest crackpot fad, it can be helpful to view it as an object lesson illustrating the mindset of contemporary liberalism.</p>
<p>Indeed, the fossil fuels divestment campaign is imbued with the liberal ideology of its ringleader. In the <a href="http://act.350.org/signup/This_American_Life/?akid=3192.212959.Dia3ug&amp;rd=1&amp;t=1">radio interview</a> my cousin forwarded to me, McKibben and his campaign come across as textbook, stereotypically liberal:</p>
<p>&#8212;Feigning a disarming humility, he candidly admitted that he has been trying to change other people for at least three decades. This is the essence of liberalism: a primary focus on changing others—no getting the beam out of one’s own eye before attempting to remove the mote from the eyes of others.</p>
<p>&#8212;Liberals love to flatter themselves as nobly free of parochial prejudices by taking digs at the USA. McKibben showed his anti-American bona fides by saying (wink, wink, ha ha!), “<i>Even</i> the United States signed [the UN document at the 2009 Copenhagen Climate Meeting agreeing to cut future CO2 emissions]” (emphasis added). This snide aspersion is particularly uncalled for, since US emissions of CO2 have been falling, while the emissions of a number of the other signatories have continued to rise.</p>
<p>&#8212;In addition to America-bashing, a distinguishing characteristic of liberals is their habitual denunciation of society’s economic benefactors. A decent, appropriate response to fossil fuel corporations would be to respect them, and perhaps even be grateful to them, for having supplied the abundant, cheap energy that lifted us from the historical norm of mass poverty to the modern norm of widespread prosperity. Indeed, in the words of energy expert Daniel Yergin, today, “Abundant low-cost energy is stimulating a revival of manufacturing in the U.S. as well as increased American competitiveness.” Yet, in the best anti-capitalist tradition, McKibben insists on portraying oil corporations as rotten malefactors rather than benefactors. In his own words, his goal is to “turn oil and gas and coal companies into pariahs.” In short, oil disinvestment is nothing more than good old-fashioned anti-capitalism. Another generation of college students is being conditioned like Pavlov’s dog to react reflexively with loathing and disgust whenever they hear the words “oil corporation.”</p>
<p>&#8212;Like so many other liberal schemes, the fossil fuel divestment campaign manifests an irrational disregard of costs. A verbal trick I once encountered in the environmentalist movement is this: Someone dares to ask, “Can we afford what you propose?” The green replies, “We can’t afford not to.” That is a copout, an evasion of reality. In this world of finite time and wealth, we can’t have or do it all, and so we prioritize on the basis of price—that is, we economize—for in this way only can we rationally calculate how much we can afford. The ostensible purpose of this campaign is to save the world from the catastrophic global warming allegedly caused by human emissions of carbon dioxide via fossil fuel consumption. I have addressed the politicized science and dubious assumptions of the climate change crowd multiple times (including <a href="http://www.visionandvalues.org/2009/10/cap-and-trade-update/">here</a>, <a href="http://www.visionandvalues.org/2010/01/climategate-copenhagen-and-cap-trade/">here</a>, <a href="http://www.townhall.com/columnists/markhendrickson/2012/08/01/a_book_review_of_brian_sussmans_ecotyranny/page/full">here</a>, <a href="http://www.visionandvalues.org/2009/05/a-closer-look-at-the-ipcc/">here,</a> and <a href="http://www.forbes.com/sites/markhendrickson2012/09/16/climate-change-hoax-or-crime-of-the-century/">here</a>). What should astound and alarm us all is that the proponents of anthropogenic global warming assert that a 50% reduction of U.S. CO2 emissions by 2050 would lessen warming by all of 0.07<sup>o</sup>C. Estimates vary about the cost of reducing our fossil fuel consumption so drastically, but I once read a UN study that put the price tag in the tens of trillions of dollars. Even by liberal standards, to pay so much for so little is breath-taking in its audacity. The oil divestment movement is essentially asking Americans to opt for a certain economic catastrophe in the near term over a hypothetical and highly uncertain economic devastation in the future.</p>
<p>&#8212;Blindness to costs is one aspect of the appalling ignorance of economics that permeates liberal reformers. Another is the apparent cluelessness about how divestment actually would affect ExxonMobil <i>et al.</i> Let’s say the campaign succeeds beyond McKibben’s wildest dreams, and American institutional investors dump their conventional energy stocks en masse. The major effect would be to knock down the price of these profitable enterprises to bargain basement levels, where opportunistic investors&#8211;the Chinese, perhaps—would gladly snap them up. Like so many liberal plans, divestment is just another hare-brained scheme that would redistribute wealth, in this case, from foolish investors to competent investors.</p>
<p>&#8212;Liberal economic ignorance continued: If the pro-divestment crowd really wanted to hurt Big Oil, they would have to find a way to slash corporate revenues and profits, not just crash the stock price. The only way to accomplish that would be to convince large numbers of people to quit using fossil fuels. How many of those jumping on the divestment bandwagon are reducing their own fossil fuel consumption in half? Don’t hold your breath. As mentioned above, liberals like to change others more than themselves. Hypocritically, they blame the producers of fossil fuel energy rather than themselves for consuming it.</p>
<p>This brings us to the bottom line of typical liberal schemes like the fossil fuel divestment campaign. It’s dishonest. McKibben doesn’t tell his recruits that the change they want depends on them accepting reductions in their standard of living. Instead, he manipulates them into believing that they are the good guys, energy companies are the bad guys, and that the only way to save the world is for the good guys to smash the bad guys. It’s all very heady stuff. Too bad it’s bunk. McKibben is a liberal pied piper who promises to lead his followers on the path to salvation—all the while taking them down the road to ruin. That destructiveness masquerading as salvation is liberalism in a nutshell.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/the-lame-brain-oil-divestment-campaign/feed/</wfw:commentRss>
		<slash:comments>7</slash:comments>
		</item>
		<item>
		<title>The View from Londonistan</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/the-view-from-londonistan/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-view-from-londonistan</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/the-view-from-londonistan/#comments</comments>
		<pubDate>Fri, 31 May 2013 04:15:34 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[christianity]]></category>
		<category><![CDATA[Islam]]></category>
		<category><![CDATA[Jihad]]></category>
		<category><![CDATA[Liberty]]></category>
		<category><![CDATA[London]]></category>
		<category><![CDATA[soldier]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=191561</guid>
		<description><![CDATA[What was once the cradle of human liberty is now a slave to totalitarian ideology. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/london-attack-2-reut-670.jpg"><img class="alignleft  wp-image-191568" alt="london-attack-2-reut-670" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/london-attack-2-reut-670-450x316.jpg" width="270" height="190" /></a>For the second straight year I’ve had the pleasure of an extended visit with my daughter in London, and for the second year, the themes of liberty and rights&#8211;and how closely related they are to conflict and religion&#8211;have been prominent.</p>
<p>Last year, we saw Magna Carta at Salisbury Cathedral. The fact that one not-so-large sheet of parchment changed the trajectory of western civilization from despotism to liberty is powerful evidence that the pen is ultimately mightier than the sword. (Regarding Magna Carta: the way the copyist managed to write each letter and space each line with a precision indistinguishable from modern print technologies is truly incredible.)</p>
<p>Last week we toured Scotland, and wherever we went, we heard stories of earlier generations of Scottish freedom fighters, saw the castles (including the famous one overlooking Edinburgh from its perch on top of a volcanic upthrust) used to defend against aggressors, and relived the conflicts between different peoples and religions. Then on Memorial Day, on a day trip to Cambridge, we saw the hallowed cemetery where 3,811 of the approximately 30,000 graves of US airmen who died while flying combat missions out of England in World War II.</p>
<p>Today, the United Kingdom and its values and liberties are under attack again. While we were enjoying Scotland’s beauty, Drummer Lee Rigby was butchered in broad daylight on the streets of London by two fanatical Islamists. We had heard about it from a taxi driver in Edinburgh, but when it really hit home for me was after we got back to London and I saw his wedding photo in one of the newspapers. The young man was one of the kindest, gentlest, most cherubic looking men I have seen in a long time, and the image of his bride gave the same impression. That such a man could be treated so brutally, such a family be devastated so wantonly, is evil of uncommon magnitude.</p>
<p>While walking to the Lords Cricket Club to share a Sunday roast with an old prep school chum, we passed one of London’s largest mosques and a number of Muslims on the sidewalk. It’s easy to see why some wag coined the word “Londonistan.” The tension and mutual mistrust were palpable. It feels like London is under siege. The mosque seems like a beachhead of an invading force. As was the case here centuries ago, a religious war threatens to rob merry olde England of its tranquility. Londoners find themselves potential targets of random attacks by guerrilla jihadists dwelling in their neighborhoods.</p>
<p>In the anguished aftermath of Lee Rigby’s murder, Londoners yearned mightily for solutions to the grim threat they feel. The problem is, there are no easy answers, only vexing dilemmas and uncomfortable tradeoffs.</p>
<p>In a land that values free speech, there are proposals to censor jihadist websites and suppress hate speech&#8211;understandable and in many ways justifiable&#8211;but such suggestions are accompanied by the nagging feelings that enforcing such objectives could lead to abuses and that driving jihadists underground may not be sufficient to prevent future guerrilla attacks.</p>
<p>In a country where one of the finest historical achievements was learning to set aside sectarian differences, agree to disagree about religion, but coexist peacefully in a civil society based on the impartial protection of individual rights, few citizens want their country to be divided by religious strife. Religious tolerance was achieved at great cost by earlier generations of Brits, but how viable is tolerance if a core tenet of one religion is intolerance of anyone outside the faith? How can Christian England avoid religious strife, when adherents of one particular religion are thrusting it upon them?</p>
<p>And how safe and practical is it to cling to the belief that it is wrong and bigoted to look at individual members of some “other group” as being potentially dangerous? The current situation is horribly unfair to Muslims who have assimilated into western culture and share our belief in religious tolerance and the separation of church and state, but the insurmountable problem is: How are we non-Muslims to know which Muslims are ticking time bomb waiting to explode?</p>
<p>I wonder whether Britons fully realize the nature of the conflict in which they are engaged. What drives Islamism is a religious belief system. The fanatics are moved by what they perceive as a higher purpose. They have the conviction that faith in divine law imparts, and the concomitant willingness to die in the service of that cause.</p>
<p>It seems to me, although I’m sure many in the West will disagree, that only a comparable belief system of religious faith, with its devotion to a purpose that transcends temporal and temporary happiness, can withstand and prevail against a fervent political-religious ideology. Somehow, I doubt that secular humanism or the facile belief that “nice people don’t butcher or seek to enslave others” won’t cut it against a rabid, unreasoning, uncompromising, to-the-death fanaticism.</p>
<p>There are visible clues about the antidote to illiberal, atavistic ideology of Islamic conquest all over London and the British isles. I refer to the ubiquitous beautiful churches and magnificent, sometimes centuries-old cathedrals. (Speaking of cathedrals, Salisbury Cathedral, which dates from the 13th century and houses Magna Carta, would be worth a visit even if Magna Carta were elsewhere.) The architectural majesty of these hallowed buildings puts to shame the uninspiring utilitarian structures of the modern era.</p>
<p>Britain’s grand and gorgeous Christian churches are monuments in stone to grand and enduring ideas. They remind us that, in spite of manifold sins and shortcomings on the part of fallible individual Christians, it has been Christian values and concepts that gave birth to our love of freedom, our respect for individual rights, the search for and discovery of the principles governing nature, and even our free market system, based as it essentially is on the Golden Rule whereby one profits to the extent of providing value to others. It was the genius of Christianity that taught us to live and let live, to tolerate others, to peacefully coexist in our economic and social lives even as we go our separate ways on the Sabbath to observe different religious traditions, or no tradition. These have been the happy and prosperous fruits of Christian culture. Many in our western societies, having achieved material abundance, have had less time for religion in recent decades. England’s churches, like the ones on the European continent and like many at home in the States, are largely empty. We have forgotten what made us what we are. Indeed, we have the right to abandon our cultural roots and forsake the teachings that lifted us above life that was nasty, brutish and short. I strongly suspect, though, that the cost of doing so will be great, and, conversely, that a return to our roots will strengthen us for the struggle ahead.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/the-view-from-londonistan/feed/</wfw:commentRss>
		<slash:comments>42</slash:comments>
		</item>
		<item>
		<title>Obama’s War on the Middle Class</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/obamas-war-on-the-middle-class/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=obamas-war-on-the-middle-class</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/obamas-war-on-the-middle-class/#comments</comments>
		<pubDate>Fri, 24 May 2013 04:30:09 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Curley effect]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Left]]></category>
		<category><![CDATA[middle class]]></category>
		<category><![CDATA[Obama]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=190671</guid>
		<description><![CDATA[The real story behind "hope" and "change." ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/NEPplan.jpg"><img class="alignleft  wp-image-190732" alt="NEPplan" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/NEPplan.jpg" width="280" height="186" /></a>How many times have you heard President Obama express concern for the middle class? More than you can count.  Even his website begins “Learn more about Barack Obama and why he’s fighting for the middle class.”<a title="" href="#_ftn1">[1]</a></p>
<p>But if we look at Obama’s actual record rather than his rhetoric, it is plain that the middle class has been one of the leading victims of his presidency.</p>
<p>The decline in median family and median net worth that began during George W. Bush’s presidency has continued under Obama. Citing recent Census Bureau data, the Pew Research Center published data showing that the only one of nine income levels whose net worth increased in the 2009-2011 period was the highest-earning cohort—those earning over $500,000 per year.</p>
<p>Income, too, showed a similar pattern: During Obama’s first term, the wealthiest 20% of households eked out a 2% gain while incomes for the rest fell.<a title="" href="#_ftn2">[2]</a> Obama may talk tough about “the rich,” but they have been the only group that have gotten richer on his watch.</p>
<p>Further evidence of Obama’s silent war on the middle class is the explosion in the number of Americans receiving food stamps. When Obama took office in January 2009, there were approximately 32 million Americans on food stamps; as of April 5, 2013, that numbered had swollen by nearly 50% to 47.3 million.<a title="" href="#_ftn3">[3]</a> Poor Americans already had been receiving food stamps before Obama became president; the increase came from members of the middle-class Americans that his policies had initiated into hard times.</p>
<p>Another dramatic indicator of economic hardship has been the unprecedented increase in the number of Americans receiving federal disability payments—8.8 million, a 19% increase in only four years. Working conditions haven’t become more dangerous;  the disturbing rise in these numbers means that many  have found it easier to get on disability than to get a job. The 1.4 million net increase in disability enrollments is five times greater than the growth in net jobs during the same period—a meager 291,000 jobs.<a title="" href="#_ftn4">[4]</a></p>
<p><b>Lowering The Economic Hammer</b></p>
<p>The three primary sources of income in a market economy are labor, investment and entrepreneurial business startups. All three have fared poorly under Obama’s policies.</p>
<p><i>Investment Income</i></p>
<p>Millions of middle-class Americans, especially seniors, prefer to stick to safe, ultralow-risk interest-paying investments, such a savings accounts, interest-earning checking accounts, money-market accounts, and certificates of deposit. A normal market rate of return on such investments would be around 3%, but today’s savers have been zeroed out by  the Federal Reserve’s “Zero Interest-Rate Policy.”<a title="" href="#_ftn5">[5]</a></p>
<p>Obama’s extraordinary increase in federal spending is the culprit. His big-spending policies far exceeded federal revenues, so they had to be financed by borrowing. The massive amount of new debt that was incurred was beyond the capacity of capital markets to finance at interest rates low enough for the federal treasury to afford. Fed Chairman Ben Bernanke became Obama’s compliant accomplice, essentially bailing out the treasury by employing extraordinary measures (the series of “quantitative easing” programs) to cram interest rates down to near zero. In doing so, Bernanke deprived millions of Americans of the option of earning safe interest income. The Fed has rigged the markets so that middle-class seniors who want the safety of U.S. Treasury debt instruments are losing income while, in effect, granting virtually interest-free loans to the federal government.</p>
<p><i>Entrepreneurial Income</i></p>
<p>Obama’s policies have had a dampening effect on business startups—foundation for the middle class. Citing a study by the Ewing Marion Kauffman Foundation, which specializes in studying startups, respected social scientist Joel Kotkin writes, “&#8230;today fewer than 8% of U.S. companies are five years old or younger, down from between 12% and 13% in the early 1980s, another period following a deep recession.”<a title="" href="#_ftn6">[6]</a></p>
<p>There are several reasons for the sluggishness in small business startups, but one of the central ones is been the administration’s heavy-handed regulatory practices. The Mercatus Center, which maintains a database of federal regulations, tabulated an average of 17,212 regulatory rules and restrictions added per year by Obama, compared to 13,441 per year under George W. Bush.<a title="" href="#_ftn7">[7]</a></p>
<p>Obama’s second term will see even more new regulations—and therefore more trouble for the middle class&#8211; as his administration proceeds to implement the most significant, complex laws passed during Obama’s first term—the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Patient Protection and Affordable Care Act (Obamacare).  Both of these pieces of legislation will remove people from the middle class and make it harder for those trying to climb the economic ladder to reach this rung.</p>
<p><i>Labor Income</i></p>
<p>The official unemployment rate has fallen at historically slow post-recession rates under Obama. At the end of April 2013, according to the Bureau of Labor Statistics, the rate was 7.5%—the lowest it has been since he became president.</p>
<p>On the surface, it might seem that this statistic points to an increasingly healthy job market. But <i>Investor’s Business Daily</i> reports, “The average workweek in April was 2% shorter than it was a year ago, marking the ‘steepest decline since 1980.’” Employers are reducing the number of hours they employ workers to avoid incurring the heavy costs of impending ObamaCare rules.<a title="" href="#_ftn8">[8]</a></p>
<p>The participation rate of the US labor force is lower than it has been in decades&#8211;63.30% as of April 30, 2013. This rate has been declining, counter-intuitively, in lockstep with the official unemployment rate.<a title="" href="#_ftn9">[9]</a> This means that the middle class is not only having a hard time finding jobs, but even giving up on the prospect of employment.</p>
<p>More than half of Americans under age 25 holding a bachelor’s degree are either unemployed or underemployed.<a title="" href="#_ftn10">[10]</a></p>
<p>Economic statistician John Williams, who maintains the well-known Shadowstats website, pegs the actual unemployment rate at the end of April 2013 at 23.0%.<a title="" href="#_ftn11">[11]</a></p>
<p>Obama channeled millions of stimulus dollars to increase employment for such favored constituencies as teachers, construction workers, and federal employees in his first two years without significantly reducing unemployment. The economic explanation is this: When a job exists (or earns as much as it does) only because of a government subsidy, then the job is costing more than the value it is producing. This imposes a net loss on society, and the wealth that is diverted from the private sector reduces its ability to create and sustain economically viable jobs.</p>
<p align="center"><b>Is the Obama-Caused Economic Weakness Intentional?</b></p>
<p>Was this Obama&#8217;s goal? Either he didn’t understand that his policies would be so detrimental, in which case he is economically illiterate and incompetent, or he knew what he was doing and was willing to sacrifice the middle class to achieve his overall goals. I think the latter is the case.</p>
<p><i>Signs of Antipathy</i></p>
<p>Five days before the 2008 election, Obama told a crowd of his supporters that “we” were on the verge of “fundamentally transforming” the country. Since the American system was designed to maximize economic opportunities and the standards of living, middle-class Americans might well wonder why Obama wanted to fundamentally change it.</p>
<p>Obama revealed his antipathy for middle-class values in the 2008 presidential campaign when he spoke contemptuously of Americans who cling to guns and religion. For 20 years, he attended Rev. Jeremiah Wright’s church where the message from the pulpit was a vehement “God damn America!”</p>
<p>It is well known that Obama is a disciple and practitioner of the strategy and tactics of the late revolutionary Saul Alinsky, who despised the middle class, denigrating them as “materialistic, decadent, bourgeois, degenerate, imperialistic, war-mongering, brutalized and corrupt.”<a title="" href="#_ftn12">[12]</a></p>
<p>Obama repeatedly displayed his disrespect for the middle class in his policy approach to the deflating housing bubble he inherited. His proposals to bail-out underwater mortgage holders—many of whom had put little or no money down on their houses—was blatantly unfair to the tens of millions of middle-class Americans who had faithfully made the monthly mortgage payments for ten, twenty, or thirty years, and to those who had deferred Hawaiian vacations, new cars, and other enjoyments to save for large down payments on their houses. Obama pushed for bailouts not only to rich Wall Street firms, but to homeowners whose adjustable-rate mortgages had been reset higher—hardly fair to more financially prudent middle class Americans who had bitten the bullet and locked in fixed-rate mortgages that initially (and potentially permanently) were at higher interest rates than those who took out ARMs.<a title="" href="#_ftn13">[13]</a></p>
<p><i>The Green Agenda</i></p>
<p>President Obama is what I call a “mean green.” Like the radical environmentalists, he objects to the American middle class’s standard of living. He disapproves of Americans living comfortably when there are poor nations in the world. In his words: “We can’t drive our SUVs and, you know, eat as much as we want and keep our homes, you know, 72 degrees at all times&#8230;and then just expect that every other country is going to say OK&#8230;[when we] keep using 25 percent of the world’s energy.”</p>
<p>That explains why Obama chose Dr. Steven Chu to be Secretary of Energy for his first term. Chu’s most famous policy goal was encapsulated in his statement, “Somehow we have to figure out a way to boost the price of gasoline to the levels in Europe.” Well, Chu didn’t succeed fully, but the price of gasoline is approximately double what it was at the outset of the Obama presidency.</p>
<p><i>Chicagoland Politics and the “Curley Effect”</i></p>
<p>Chicago politicians are known for being particularly ruthless in their pursuit of political power. They play hardball. Their goal is to demolish their competition and forge a permanent majority. It hardly seems surprising, then, that Barack Obama is doing his best to take the Curley effect, historically an urban phenomenon, nationwide.</p>
<p>As defined by Harvard scholars Edward L. Glaeser and Andrei Shleifer in a famous 2002 article, the Curley effect (named after its prototype, James Michael Curley, a four-time mayor of Boston in the first half of the 20<sup>th</sup> century) is a political strategy of “increasing the relative size of one’s political base through distortionary, wealth-reducing policies.”  Translation: A politician or a political party can achieve long-term dominance by tipping the balance of votes in their direction through the implementation of policies that reward their political allies and punish their opponents, even if the overall result is economic decline. Yes, strange as it seems, making a city poorer often increases the power of those who engineer that impoverishment.</p>
<p>Here is how the Curley effect works: Politicians adopt policies that bestow tax-financed favors on various special interest groups—welfare constituencies, unions, the public sector in general, and select corporations. In demonstration of George Bernard Shaw’s astute axiom, “The government that robs Peter to pay Paul can always count on the support of Paul,” the recipients of those favors and handouts loyally support their political patrons, giving them reliable electoral support in the form of votes, campaign contributions, get-out-the-vote drives, etc.</p>
<p>Meanwhile, those segments of the population who bear the economic burden of supporting the favored special interests often flee. This reduces the number of political opponents on the city’s voter registration rolls, thereby tilting the electoral balance and making it more likely that the political party running the wealth redistribution scheme stays in power. So successful has this strategy been for Democrats that they have retained uninterrupted control of many large American cities for decades, and in the more extreme cases, have created virtual one-party fiefdoms.</p>
<p>Perhaps you have seen the chain e-mail listing the ten poorest US cities with a population of at least 250,000: Detroit, Buffalo, Cincinnati, Cleveland, Miami, St. Louis, El Paso, Milwaukee, Philadelphia, and Newark. Besides all having poverty rates between 24% and 32% and a vanishing middle class, these cities share a common political factor: Only two have had a Republican mayor since 1961, and those two (Cincy and Cleveland) haven’t had one since the 1980s. Democratic mayors have had a lock on City Hall despite these once-great and prosperous cities stagnating on their watch. This is the Curley effect in action.</p>
<p>The strategic mistake of the Democratic leaders of those poor cities have adopted policies so virulently anti-business that they have hollowed out the economic base of the city and caused stagnation, decline, and bankruptcy.</p>
<p>Obama is trying to achieve the Curley effect nationwide. He is striving to forge a political coalition that will give the Democrats a permanent electoral majority. He has adopted a two-pronged strategy. On the one hand, he has done everything he could to strengthen Democratic constituencies (e.g., stimulus spending steered predominantly toward unions and strategically allied state and municipal entities; waivers from Obamacare for unions; continual increases in the Index of Dependence on Government during Obama’s presidency);<a title="" href="#_ftn14">[14]</a> on the other, he has endeavored to weaken Republican constituencies by strengthening alliances with Big Business while making things difficult for small businesses, because the latter are “a building-block of the Republican base.”<a title="" href="#_ftn15">[15]</a></p>
<p>If Obama and his fellow progressives succeed in achieving the Curley effect on the national level, Americans will no longer be able to move to a new city or state to escape the withering economic impact of Curley-style politics. Their only option would be to leave the country.  However, it appears that Obama has anticipated that response. To close the escape hatch from an Obama-led, Curley-effect America, the president has signed the Foreign Account Tax Compliance Act that mandates closer monitoring of Americans’ offshore accounts. He also seems to favor policies that would impose financial penalties on anyone desiring to give up U.S. citizenship, and he has called for “global minimum taxes.”<a title="" href="#_ftn16">[16]</a></p>
<p style="text-align: center;"><b>An Enduring Crisis of the Middle Class</b></p>
<p>Obama’s policies are enlarging the twin millstones around the neck of the middle class&#8211; taxation and inflation. While it is true that income tax rates haven’t yet risen under Obama and inflation has surfaced only in a few areas (e.g., food and energy) these twin curses are quietly gathering strength for a future whirlwind of destruction. The six trillion dollars of new debt resulting from Obama’s spending binge (plus trillions more of accumulated unfunded federal liabilities) are tax hikes on future taxpayers. As mentioned earlier, the costs of this flood of red ink has been obscured by the Fed’s Zero Interest Rate Policy and its willingness to buy approximately 60% of new federal debt with newly created dollars. Whenever ZIRP ends, some combination of massive tax hikes and/or raging inflation will ensue. .</p>
<p>Already, Obama’s economic policies have hurt the middle class. They have sapped the job market, raised food and energy bills, and resulted in falling incomes and net worth. Now the table is set for additional economic pain in the future.</p>
<p>A contracting middle class in retreat from the optimism and affluence that have always been its hallmark is, at this stage of his presidency, Barack Obama’s legacy.</p>
<div>
<p><strong>Notes:</strong></p>
<hr align="left" size="1" width="33%" />
<div>
<p><a title="" href="#_ftnref1">[1]</a> <a href="http://www.barackobama.com/about/barack-obama/">www.barackobama.com/about/barack-obama/</a> accessed May 5, 2013.</p>
</div>
<div>
<p><a title="" href="#_ftnref2">[2]</a> Obamanomics: Rich Get Richer, Everyone Else Poorer,” (unsigned editorial) Investors Business Daily, Posted 04/24/2013 6:69 PM ET. news.investors.com/ibd-editorials/042413-653244-rich-get-richer-poor-poorer-under-obama.htm</p>
</div>
<div>
<p><a title="" href="#_ftnref3">[3]</a> Matt Trivisonno’s blog, accessed May 5, 2013; <a href="http://www.trivisonno.com/food-stamps-charts">www.trivisonno.com/food-stamps-charts</a></p>
</div>
<div>
<p><a title="" href="#_ftnref4">[4]</a> John Merline, “Nearly 90,000 Apply for Disability, December Record,” posgted 12/21/12 01:19 PM ETnews.investors.com/122112-637978-disability-ranks-continue-to-explode-under-obama.htm?p=full</p>
</div>
<div>
<p><a title="" href="#_ftnref5">[5]</a> Mark W. Hendrickson, “We’ve Been ZIRPed,” Grove City PA: The Center for Vision &amp; Values, October 12, 2011; <a href="http://www.visionandvalues.org/2011/10/we-ve-been-zirped/">www.visionandvalues.org/2011/10/we-ve-been-zirped/</a></p>
</div>
<div>
<p><a title="" href="#_ftnref6">[6]</a> <a href="http://www.forbes.com/sites/joelkotkin/2013/03/13/wall-streets-hollow-boom-with-small-business-and-startups-lagging-employment-wont-pick-up/">www.forbes.com/sites/joelkotkin/2013/03/13/wall-streets-hollow-boom-with-small-business-and-startups-lagging-employment-wont-pick-up/</a></p>
</div>
<div>
<p><a title="" href="#_ftnref7">[7]</a> Joseph Lawler, “President Obama Leads in Regulations Issued,” posted on realclearpolicy.com on November 2, 2012; <a href="http://www.realclearpolicy.com/blog/2012/11/02/president_obama_leads_in_regulations_issued_338.html">www.realclearpolicy.com/blog/2012/11/02/president_obama_leads_in_regulations_issued_338.html</a></p>
</div>
<div>
<p><a title="" href="#_ftnref8">[8]</a> “The ObamaCare Train Wreck Is Already Here,” IBD Editorial, posted May 6, 2013 07:18 PM ET; news.investors.com/ibd-editorials/050613-655037-the-obamacare-train-wreck-is-already-here.htm?p=full</p>
</div>
<div>
<p><a title="" href="#_ftnref9">[9]</a> data.bls.gov/timeseries/LNS11300000; cf. “US Labor Force Participation Rate,” ycharts.com/indicators/labor_force_participation_rate</p>
</div>
<div>
<p><a title="" href="#_ftnref10">[10]</a> Mark Hendrickson, “Myth-Busting 101,” posted on forbes.com August 16, 2012; <a href="http://www.forbes.com/sites/markhendrickson/2012/08/16/mythbusting-101-uncomfortable-truths-your-college-wont-tell-you/">www.forbes.com/sites/markhendrickson/2012/08/16/mythbusting-101-uncomfortable-truths-your-college-wont-tell-you/</a></p>
</div>
<div>
<p><a title="" href="#_ftnref11">[11]</a> Bill Quick, A Reality Check from Shadowstats.com, posted on dailypundit.com, May 3, 2013; <a href="http://www.dailypundit.com/?p=71610">www.dailypundit.com/?p=71610</a></p>
</div>
<div>
<p><a title="" href="#_ftnref12">[12]</a> Saul Alisky, <i>Rules for Radicals</i>, p. 185, quoted in James R. Keena, <i>We’ve Been Had</i>, Nahsville TN: Twin Creek Books, 2010, p. 68.</p>
</div>
<div>
<p><a title="" href="#_ftnref13">[13]</a> Mark W. Hendrickson, “Tough Times for Wise Virgins,” Grove City: The Center for Vision &amp; Values, posted February 18, 2009; www.visionandvalues.org/2009/02/tough-times-for-wise-virgins/</p>
</div>
<div>
<p><a title="" href="#_ftnref14">[14]</a> Patrick Tyrrell, “Index of Dependence on Government Jumps for the Fourth Year in a Row,” posted on “The Foundry,” a Heritage Foundation blog Sept. 18, 2012; blog.heritage.org/2012/09/18/index-of-dependence-on-government-jumps-for-the-fourth-year-in-a-row/</p>
</div>
<div>
<p><a title="" href="#_ftnref15">[15]</a> Kotkin, “Wall Street’s Hollow Boom.”</p>
</div>
<div>
<p><a title="" href="#_ftnref16">[16]</a> Mark Hendrickson, “Team Obama: Tax Predators On The Prowl,” posted on forbes.com, 4/19/2012 @ 5:45PM; <a href="http://www.forbes.com/sites/realspin/2012/04/19/team-obama-tax-predators-on-the-prowl/">www.forbes.com/sites/realspin/2012/04/19/team-obama-tax-predators-on-the-prowl/</a></p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref%3dnb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n:133140011%2ck:david+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n:133140011%2ck:david+horowitz&amp;sort=daterank" target="_blank">Click here</a>.  </strong></p>
</div>
</div>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/obamas-war-on-the-middle-class/feed/</wfw:commentRss>
		<slash:comments>27</slash:comments>
		</item>
		<item>
		<title>It&#8217;s Official: Federal Debt Will Never Be Paid</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/the-federal-debt-will-never-be-paid/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-federal-debt-will-never-be-paid</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/the-federal-debt-will-never-be-paid/#comments</comments>
		<pubDate>Thu, 16 May 2013 04:40:43 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[debt]]></category>
		<category><![CDATA[default]]></category>
		<category><![CDATA[Deficit]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Government spending]]></category>
		<category><![CDATA[trillion]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=189654</guid>
		<description><![CDATA[And the implosion is coming. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/MoneyHole.jpg"><img class="alignleft  wp-image-189686" alt="MoneyHole" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/MoneyHole-450x333.jpg" width="315" height="233" /></a>A trillion dollars is a LOT of money. Stacking hundred-dollar bills flat on top of each other, a forty-inch stack would be one million, a stack one-and-one-half times as tall as the Empire State Building would be a billion, while a stack 631 miles high (from Pittsburgh to the other side of St. Louis) would be a trillion. That’s just one trillion. The national debt is approaching $17 trillion.</p>
<p>That is the official total. However, that figure greatly understates the problem by not counting unfunded liabilities. During the previous two fiscal years, the government added $2.6 trillion to the nominal national debt, but using GAAP (generally accepted accounting principles) the actual tally was over $10 trillion of new debt.</p>
<p>Estimates of total federal indebtedness vary according to the time frame one adopts and various assumptions about the future, but whether the actual figure is nearer $75 trillion of $221 trillion (economist Laurence Kotlikoff’s tally) the true federal debt is multiples of our GNP—an incomprehensibly high figure that can never be paid in full.</p>
<p>Contrary to Democratic protestations, our debt problem is essentially a spending problem. Look at this graph from the Federal Reserve:</p>
<p style="text-align: center;"><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/Picture-2.png"><img class="size-medium wp-image-189684 aligncenter" alt="Picture 2" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/05/Picture-2-450x250.png" width="450" height="250" /></a></p>
<p>The blue line is revenue and the red line is federal spending since the late 1940s. Uncle Sam clearly has not been starved for revenues, but it has proven impossible to keep up with the breakaway explosion in spending.</p>
<p>The crux of the spending problem is in the area of entitlements. Exhibit A: Federal revenues and budget requests (i.e., expenditures) for Fiscal Year 2011. Social Security, Medicare, Medicaid, and interest on the national debt totaled over $2.4 trillion versus that year’s total federal revenue of $2.3 trillion. Conclusion? What we usually think of as “the government”—the various departments, agencies, and bureaus—was financed entirely by borrowed money.</p>
<p>To add insult to injury, despite all the red ink, federal profligacy has continued. Absurd spending programs abound—everything from a $750,970 grant to a successful brewery, to $2 million for ten cupcake shops, to $150 million to study lesbian obesity. Program redundancy is epidemical—82 federal programs to improve the quality of teaching, 47 for jobs training, 160 to support housing, 53 to spur entrepreneurship, at least 116 financial regulatory bodies, and 56 programs to teach financial literacy (obviously not working, since we keep digging ourselves deeper into debt).</p>
<p>How did we get into such a mess? Here are three key reasons:</p>
<ol>
<li>The moral poison in our society that has caused us to find justifications to redistribute property. Americans who would never consider entering a neighbor’s house and taking some of his property think nothing of consuming some of their neighbors’ wealth if the government takes it on their behalf.</li>
<li>The progressive ideology which transformed our concept of government from negative to positive law—that is, altering the primary function of government from trying to keep bad things, like violence or theft, from happening to us (negative) to actively trying to do things for us (positive). The problems with this are twofold: first, the government can’t give anything to anybody without first taking it from somebody else; second, once you decide that government should do “A” for Jones (say, help with his food) then why not “”B,” “C,” “D,” etc. (help with housing, medical care, retirement, ad infinitum with no logical stopping point); also, if you help out Jones, why not Schmidt, Gonzalez, Miller, and so on? In other words, progressivism is an ideology for the never-ending expansion of government spending.</li>
<li>The perverse incentives of democracy, which impel politicians to gain popularity by conferring benefits while avoiding the negative backlash that results from raising taxes. Eventually, democratic pressures cause politicians to shift the burden of their grandiose spending plans onto those who are in no position to penalize them at the ballot box—Americans who aren’t yet voters, either by being too young or not yet having been born.</li>
</ol>
<p>To repeat: The massive federal debt never will be paid. One reason is the simple economics of debt: The more debt there is in a society, the more current income is needed to service the debt rather than to produce new wealth. The marginal productivity of debt (that is, the amount of new wealth produced per dollar of new debt added) has been declining in the U.S. for half a century. During the 2008-9 financial crisis, it fell below zero. Whatever the figure is now, we simply aren’t able to get much bang for our additional debt bucks, sort of like a junkie in the advanced stages of addiction.</p>
<p>There is a more ominous reason why the younger generation will find it impossible to honor Uncle Sam’s extravagant promises: Already young people burdened with college debt are delaying marriage and having children. These trends will accelerate when future congresses raise taxes to try to fulfill its entitlement promises. The result will be a population implosion. That will further increase the per-person debt burden, generating a vicious cycle that will culminate in economic cataclysm and political volatility. The unaffordable spending spree of the last generation has created an existential threat to America itself. Without realizing it, we have been voting for a coming implosion of our population and the concomitant destruction of our own society.</p>
<p>The practice of spending today while asking future generations to pay for it was deemed immoral by earlier generations of Americans. Jefferson spoke for the majority when he described federal debt as “swindling futurity” and a mortal threat to liberty. If generations could shift the burden of their debts to future generations, said Jefferson, “then the earth would belong to the dead and not to the living generation.”</p>
<p>Jefferson asserted that no nation “can validly contract more debt than they may pay within their own age, or within the term of 19 years.” By what abstruse calculations he arrived at the term of “19 years,” I have no idea. In the Old Testament of the Bible, the jubilee principle stated, “At the end of every seven years you must declare a cancellation of debts” (Deut. 15:1, NET Bible © 2006). Today, as we drown in debt and the rising generation faces the prospect of being debt slaves, it is clear that we wouldn’t be in such a woeful fiscal hole if we had adhered to the principle articulated by Jefferson and the ancient Hebrews.</p>
<p>So, what can the younger generation do? At some point, they will have no choice but to repudiate the national debt. That may sound radical, but even if they don’t act to repudiate the debt openly, you can bet your bottom Federal Reserve Note that the central bank will repudiate much of our debt via the subterfuge of monetary depreciation.</p>
<p>Our younger generations would be justified in repudiating the debt. The heavy taxes they will be asked to pay for today’s deficit spending are unjust. They amount to taxation without representation. The younger generations are not contractually bound to honor federal debt. There was no quid pro quo—they didn’t receive the benefits of the federal largess that they are expected to pay for. Not only would they be justified in taking such drastic actions, they need to do so in order to have a chance to rescue themselves and the future of America itself from the above-mentioned potentially fatal population implosion.</p>
<p>What form may this repudiation take? At some point, when enough of them recognize the untenable position into which their elders have placed them, the younger generations will need to coalesce around a debt-cancelling political agenda. This agenda would consist of two parts: 1) paying off federal bondholders, foreign and domestic, at X cents on the dollar (perhaps using the immense inventory of real property that Uncle Sam owes in settlement of debts); 2) dismantling the pay-as-you-go format of federal entitlements and replacing them with accounts in each individual’s name (with their contributions making no detours into the federal Treasury)—a policy based on the time-tested principles of private property and voluntary cooperation rather than on compulsory participation in programs predicated on collectivized risk.</p>
<p>The second step is absolutely indispensable for both practical and moral reasons. To wipe out the existing debt, but then continue the bankrupt policies of using government to confer financial privileges and redistribute wealth would simply place their own children into the same abyss of debt from which they themselves had escaped, and to lay claim to the same benefits that liquidation of the national debt would deny to older Americans. Repudiation of the debt without abandoning the corrupt politics of the transfer society would be morally indefensible.</p>
<p>In short, the national debt, as destructive as it is and as badly as we need to eliminate it, is only the symptom. The actual disease is the modern democratic redistributionist state that grants favors, privileges, and benefits to some citizens paid for by others. We will reap the bitter fruits of what we are now sowing.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/the-federal-debt-will-never-be-paid/feed/</wfw:commentRss>
		<slash:comments>111</slash:comments>
		</item>
		<item>
		<title>The Internet Sales Tax: Another Assault On The Constitution</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/the-internet-sales-tax-another-assault-on-the-constitution/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-internet-sales-tax-another-assault-on-the-constitution</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/the-internet-sales-tax-another-assault-on-the-constitution/#comments</comments>
		<pubDate>Wed, 01 May 2013 04:28:58 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Bill]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Harry Reid]]></category>
		<category><![CDATA[Internet]]></category>
		<category><![CDATA[revenue]]></category>
		<category><![CDATA[Sales Tax]]></category>
		<category><![CDATA[Senate]]></category>
		<category><![CDATA[Spending]]></category>
		<category><![CDATA[Vote]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=187656</guid>
		<description><![CDATA[Can a last minute conservative backlash stop the anti-consumer bill from being rammed through Congress?]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/04/internet-sales-tax.jpg"><img class="alignleft  wp-image-187672" alt="internet-sales-tax" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/04/internet-sales-tax-450x307.jpg" width="270" height="184" /></a>It’s amazing how fast Senate Majority Leader Harry Reid (D-NV) can act when he wants to. Having doodled and dawdled for about four years without even producing a budget, Reid suddenly shed his torpor during the last two weeks in April. So eager was he to pass a bill authorizing state governments to collect tax on interstate Internet sales that he bypassed the normal committee process of holding hearings so senators could examine the pros and cons. The bill was introduced (actually, reintroduced) on April 16, and if Reid had gotten his way, it would have passed already. Opponents barely managed to postpone the vote on it until May 6.</p>
<p>One of the interesting aspects of this bill (known by the Orwellian title of “Marketplace Fairness Act”) is that 27 Republican senators currently favor it. Only 24 or 25 senators currently oppose the bill—a bipartisan combination of senators from the five states that do not have a sales tax, plus some economic conservatives from the Tea Party wing of the GOP, such as Marco Rubio, Mike Lee, and Ted Cruz.</p>
<p>The reason so many senators favor the Marketplace Fairness Act is simple: State governments are desperate for revenue to fund their ever-escalating expenditures, and their allies in the U.S. Senate are trying to help them collect it. Internet sales in the US totaled $226 billion last year, and a revenue stream that large easily becomes a tempting target for big spenders.</p>
<p>Proponents of the tax focus on “fairness.”  They claim that out-of-state online vendors enjoy a competitive advantage against local brick-and-mortar companies that must pay sales tax to their state governments, and that this inequitable situation must be corrected. This is economically ignorant. The whole point of economic competition is that some businesses have competitive advantages over others. This gives consumers choices and they end up buying from the businesses that give the most value for the least money.</p>
<p>There are, of course, two possible ways for state governments to eliminate the existing disparity: Impose the same tax burden on out-of-state Internet-based competitors, or remove the sales tax burden under which in-state businesses labor. The problem with eliminating the sales tax for in-state firms is that those firms consume various government-provided services (roads, courts, state police, perhaps even business subsidies) and it is only right that the businesses pay for those benefits. The problem with initiating taxes on out-of-state firms is: Why should out-of-staters pay taxes to a government when they consume none of the services or wealth transfers provided by that government? Why should they pay taxes to political entities for whom they are not eligible to vote and who are completely unaccountable to them? That is taxation without representation—a major principle for which American patriots fought the Revolutionary War—and there is nothing fair about it (hence, the Orwellian character of putting “fairness” in the name of the bill).</p>
<p>Allowing state governments to begin imposing sales tax on out-of-state businesses is worse than unfair: It’s unconstitutional. The federal government has no such authority. Article I, Section 9, Paragraph 5 on the United States Constitution stipulates, “No Tax or Duty shall be laid on Articles Exported from any State.” Article I, Section 10, Paragraph 2 of the Constitution states, “No state shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports…” The constitution created the world’s first large free-trade zone—the United States of America—and for a majority of United States senators to place expediency above constitutional integrity is unconscionable.</p>
<p>One of the sadder aspects of the move to rush this new form of taxation through the Senate was that supply-side guru, the famous economist Arthur Laffer, quickly jumped on board. Laffer and his supply-side allies deserve great credit for reviving an understanding of how marginal tax rates create incentives for individuals, and for showing how some government taxes are less harmful than others. However, the Achilles’ heel of the supply-siders always has been their tendency to focus more on taxation than on the fundamental economic danger: Government spending. Laffer repeats that error today by endorsing the Marketplace Fairness Act.</p>
<p>Writing in The Wall Street Journal on April 18, Laffer cites data showing that state governments could have garnered at least $23 billion in 2012 by taxing Internet sales. He laments that this “lost” revenue resulted in marginal tax rates being raised. While Laffer is correct that raising marginal tax rates is harmful, he is too quick to assume that state governments will lower them if they gain the power to tax Internet sales. Worse, he doesn’t even attempt to make the case that state governments should spend less as the optimal way to stimulate the economic growth that he wants. When it comes to spending, Laffer takes the road of least resistance and comes down on the side of the status quo—clearly a political decision more than an economically sound one.</p>
<p>Indeed, on an economic level, it is amazing that so many senators feel safe in supporting the Marketplace Fairness Act. Having states add a tax to interstate Internet sales will raise the prices that consumers pay. Of course, that is SOP (standard operating procedure) for government; after all, government&#8217;s war against higher standards of living by imposing higher prices on consumers in a multiplicity of ways—e.g., subsidies, quotas, tariffs, business taxes, antitrust law, hyper-regulation, et al. With all those policies, government makes economic goods more costly to consumers.</p>
<p>At the time of this writing, it looks like the expansion of states’ taxing power is a done deal. One can only hope that the Supreme Court will uphold a challenge to the Marketplace Fairness Act’s constitutionality later on. However, in 2009 the Supremes declined to hear a case challenging a Massachusetts law taxing out-of-state corporations that generated sales in Massachusetts. Add to that the contorted verbal gymnastics that were used to uphold the Affordable Care Act last year, and it is hard to feel optimistic about our constitutional rights being safe. It appears to me that federalism is dying and state and national legislators are colluding to extract more money from the private sector.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/the-internet-sales-tax-another-assault-on-the-constitution/feed/</wfw:commentRss>
		<slash:comments>24</slash:comments>
		</item>
		<item>
		<title>Margaret Thatcher’s Passing and the Hateful Spirit of the Left</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/margaret-thatchers-passing-and-the-hateful-spirit-of-the-left/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=margaret-thatchers-passing-and-the-hateful-spirit-of-the-left</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/margaret-thatchers-passing-and-the-hateful-spirit-of-the-left/#comments</comments>
		<pubDate>Wed, 17 Apr 2013 04:35:44 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[death]]></category>
		<category><![CDATA[funeral]]></category>
		<category><![CDATA[HATE]]></category>
		<category><![CDATA[Left]]></category>
		<category><![CDATA[Margaret Thatcher]]></category>
		<category><![CDATA[Marx]]></category>
		<category><![CDATA[Socialist]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=186064</guid>
		<description><![CDATA[The morbid legacy of Marx and Lenin. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://cdn.frontpagemag.com/wp-content/uploads/2013/04/Margaret+Thatcher.jpg"><img class="alignleft  wp-image-186065" alt="Margaret+Thatcher" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/04/Margaret+Thatcher-450x318.jpg" width="270" height="191" /></a>Since former British Prime Minister Margaret Thatcher passed away last week, small pockets of leftists have been figuratively spitting on her memory. You’ve probably seen the stories of their juvenile antics, such as drinking champagne in Trafalgar Square while holding up disrespectful signs and singing “Ding Dong! The Witch Is Dead.”</p>
<p>What are we to make of such behavior?</p>
<p>It is obvious to any mature person that such boorish shenanigans cast an unfavorable light, not on Lady Thatcher, but on those individuals who lower themselves to such self-demeaning rudeness. There are dignified ways to express one’s disagreement with Thatcher’s policies as a grateful nation prepares to honor her memory with a ceremonial funeral. An outstanding example of this more civilized approach was that of Argentina’s foreign minister, Hector Timerman. Having not been invited to the funeral due to the decades-long strained relations between his country and the UK, Timerman stated that he did not want to be there anyhow, but that the family should be allowed to mourn in peace. That was classy.</p>
<p>The left, by contrast, prefers to mark this great leader’s passing with derision and disrespect. Part of this is due to simple ignorance combined with a failure of decency.  I am thinking here of twenty-something Britons, who have no personal recollections of Thatcher’s time in office, rendering themselves ridiculous by vilifying her. These young people seem sadly ignorant of the historical reality that Thatcher’s visionary leadership and steely resolve revitalized what had become a moribund economy in the UK.</p>
<p>These kids have acted on hearsay. They have had a parent or teacher tell them that the Iron Lady was mean and that she stepped on people. That calumny is the standard refrain of older Britons, such as trade unionists and Oxford dons, who never forgave Thatcher for cutting off or reducing the flow of government subsidies to them. What the young people denigrating Thatcher don’t understand is that Thatcher did not set out to lay a burden on those formerly privileged constituencies, but rather to lift off the burden that those special interest groups had laid on the beleaguered British taxpayer. To use contemporary terminology, the dons and unionists were cronies of politicians who had channeled large flows of tax monies to them for decades. Today, the left rightly denounces the corruption of political cronyism and the lining of pockets of special interest groups. To be consistent, they should salute Thatcher for having taken on the special interests, reducing cronyism, providing relief to taxpayers, and reinvigorating the UK’s economy.</p>
<p>Besides immaturity, ignorance, spite, and revenge, there is another motive for the unseemly anti-Thatcher eruptions—the reason why the left’s ugly behavior should not be surprising: The left loves to hate. This is their essence, the deformed heart of their ideology.</p>
<p>The leftist penchant for personal vilification dates back at least as far as to Karl Marx. According to Bertolt Brecht, Marx boasted that he was “the greatest hater of the so-called positive.” He also was an avid practitioner of the ad hominem attack—the preferred weapon of those who can’t win arguments through reason and logic.</p>
<p>Marx crushed his rivals for intellectual leadership of the socialist movement by ridiculing their theories as “utopian” while insisting that his own version of socialism was “scientific.” What a farce! Remember, Marx had written in “The German Ideology” (1845), “&#8230;in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming a hunter, fisherman, herdsman or critic.” He also insisted in “The Communist Manifesto” that the way to make the state disappear was to give all power to the state. Marx was nothing more than a mystic whose “scientific socialism” was fraudulent (an author named Fred Gottheil once catalogued Marx’ historical predictions and found that, out of 325, only six had proven correct); hence, the only way Marx could prevail was to resort to the scorched-earth tactic of verbally abusing and annihilating his opponents—a tactic retained by his intellectual heirs.</p>
<p>Lenin made the centrality of hatred in leftist movements chillingly explicit. In 1923, he told the Soviet commissars of education, “We must teach our children to hate.  Hatred is the basis of communism.”  In his tract “Left-Wing Communism,” Lenin baldly asserted that hatred was “the basis of every socialist and Communist movement.”</p>
<p>The hateful spirit of Marx and Lenin has suffused all leftist ideologies, movements, and regimes, whether Soviet communism, Hitler’s national socialism, or today’s illiberal progressivism and pagan environmentalism.  Only hatred could explain the willingness to kill, enslave, and rob vast numbers of innocent human beings.  Hatred corrodes one’s conscience.  Under its toxic influence, a person will regard man’s God-given right to be secure in his life, liberty, and property as nuisances to be overcome, not commandments to be obeyed.  The flip side of hatred is an inflated self-love, self-importance and self-righteousness so extreme that respect for other human beings diminishes and, in extreme cases (Stalin, Mao, Castro, Kim, <i>et al</i>.), disappears.</p>
<p>Hatemongering is alive and well on the left today. American leftists, aping the deviousness of Marx himself, protest “hate crimes,” then proceed to foment hatred for right-thinking Americans. Thus, they churn out bilge like “The I Hate Ann Coulter, Bill O’Reilly, Rush Limbaugh…Reader,” “The I Hate Dick Cheney…Reader,” and “The I Hate George W. Bush Reader.” In fact, now that the Ku Klux Klan has (thankfully!) petered out, the anti-communist-hating American left appears to have taken over as our country’s most virulent hate group.</p>
<p>British leftists have been demonstrating their hate and wretchedness by trying to detract from the solemnity and dignity of the funeral of one of the 20<sup>th</sup> century’s great leaders. I think, though, that their boorishness has backfired. By displaying their morbid glee on the occasion of Mrs. Thatcher’s passing, they unwittingly have paid her a great tribute. For leftists to have made such a big deal about the death of an elderly lady who has been out of the public realm for more than two decades, shows how great and effective she was as a champion of individual liberty, true justice, and smaller government. In this perverse way, the left’s ungracious display of pettiness is the greatest salute they could give to Margaret Thatcher. I think the Iron Lady would be pleased that she earned this backhanded compliment.</p>
<p>Now, while the leftists stew in their own pathetic, self-imposed unhappiness, the rest of us can celebrate a life well-lived and remember with gratitude a principled leader who did so much for so many. Bravo, Mrs. Thatcher. Well done!</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/margaret-thatchers-passing-and-the-hateful-spirit-of-the-left/feed/</wfw:commentRss>
		<slash:comments>52</slash:comments>
		</item>
		<item>
		<title>Remembering the Iron Lady</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/remembering-the-iron-lady/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=remembering-the-iron-lady</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/remembering-the-iron-lady/#comments</comments>
		<pubDate>Tue, 09 Apr 2013 04:55:23 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[87]]></category>
		<category><![CDATA[british]]></category>
		<category><![CDATA[Conservative]]></category>
		<category><![CDATA[Dead]]></category>
		<category><![CDATA[died]]></category>
		<category><![CDATA[Margaret Thatcher]]></category>
		<category><![CDATA[U.K.]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=184963</guid>
		<description><![CDATA[The grocer's daughter who took the world by storm -- and helped define her era. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://frontpagemag.com/2013/mark-hendrickson/remembering-the-iron-lady/thatcher-color-small/" rel="attachment wp-att-184964"><img class="alignleft  wp-image-184964" title="Thatcher color small" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/04/Thatcher-color-small-285x350.jpg" alt="" width="171" height="210" /></a>Confession time: The grocer&#8217;s daughter  was the only world leader to whom I ever sent a Valentine’s Day card.</p>
<p>I did so in 1980, just a few months after she began her eleven-year run as the United Kingdom’s only female prime minister (1979-1990). There was nothing romantic about it. It was simply a gesture of friendship across an ocean to someone—a kindred heart and spirit—who so clearly understood the dangers posed at that time by an assertive, expansionist Soviet empire that had just invaded Afghanistan. Mrs. Thatcher was just the kind of friend that the US needed at that time. I was surprised, and humbled, when I received a gracious acknowledgment of my card from one of the PM’s secretaries.</p>
<p>Lady Thatcher, who passed away Monday at age 87, helped to define her era. During her eleven years at 10 Downing Street, she was one of those commanding presences about whom it could be said, “Tell me what you think of Margaret Thatcher, and I’ll tell you who you are.”</p>
<p>Those who believed then or believe now in traditional values—private property, voluntary cooperation, hard work receiving its deserved reward, individual rights, principled opposition to suffocating statism (the welfare state at home, Marxism-Leninism abroad)—admired, even adored, this one-of-a-kind leader. Leftist ideologues, comprehending the existential threat she posed to their beliefs and impotent in the face of her moral and intellectual clarity, futilely denigrated her.</p>
<p>She fully deserved the label coined by a Soviet journalist—“Iron Lady.” Margaret Thatcher had courage, resoluteness, and a strength of character unmatched by any other democratic politician of her generation—Tory or Labour, in the UK and outside of it—combined with the dignity, poise, and refinement of a lady in the highest sense of the word.</p>
<p>For me, the passing of Lady Thatcher has a personal dimension beyond the Valentine card. I did some graduate work at Oxford (Shakespeare, not economics) in the mid-‘70s, and my time living in England was eye-opening. Like many, if not most, American undergraduates during the Vietnam War years, I had been inundated with anti-capitalist, social-engineering do-goodism. Living the dreary day-to-day reality of Britain’s stagnant, heavily socialized economy caused me to finally, emphatically, and completely forsake any belief in the efficacy of government economic control over economic activity. Economic prospects for middle-class or poor Brits appeared abysmal, nearly hopeless.</p>
<p>It also seemed to me that the US was on the same path as the UK, although, thankfully, several decades behind it. I remembering hoping that we would never find ourselves in similar circumstances; I also couldn’t see, at that point, how Britain could climb out of its self-imposed economic morass. What I had not counted on was the emergence of a leader as effective as Margaret Thatcher.</p>
<p>Mrs. Thatcher crafted one of the most successful national economic policy regimes of the 20<sup>th</sup> century. This was no small feat, considering that her academic training was in chemistry and later in law.</p>
<p>Thatcher had developed an understanding of the values and virtues of free enterprise as a child, when she worked with her father in his grocery store. Heavily influenced by the Austrian economist, Friedrich Hayek, she understood the importance of shrinking the footprint of the state by reducing government spending and stemming the depreciation of the currency. She proceeded to implement the necessary policies, despite the short-term pain the inevitably caused.</p>
<p>The core of her successful economic program was encapsulated in the word “privatization.”</p>
<p>The UK’s budget had been out of control. Major industries were bleeding the Treasury, creating a never-ending need for more revenues. The problem was, the heavier the tax burden on the private sector grew, and consequently, the more sluggish economic growth became. The leviathan state was crushing the life out of the UK’s economy.</p>
<p>Thatcher realized that government efforts to encourage state-subsidized industries to operate more efficiently were futile. She understood economic incentives and human psychology, stating, “Why should they be efficient? They had access to the Treasury purse.”</p>
<p>By privatizing state-owned businesses, Thatcher shrank government budget deficits in three ways: 1) By selling shares to the public, the government treasury received cash infusions. 2) The divested businesses ceased to receive subsidies, thereby reducing government expenditures. 3) Through the invigorating pressures of competition and the newly acquired need to strive for a profit, formerly money-losing enterprises trimmed fat, improved quality, and generated profits, generating additional revenues for the government.</p>
<p>Thatcher’s privatizations (she accomplished the privatization of approximately 2/3 of the UK’s nationalized firms during her tenure as PM) allowed her to reduce marginal tax rates on work and savings. Her tax policy, combined with an end to the inflationary policy of financing the formerly bloated government deficits with loose money policies, turbo-charged the UK’s Thatcher-led economic boom.</p>
<p>It is important to realize how close the UK came to abandoning Thatcher’s program before it had time to go into effect. She faced fervid denunciation from all the special interests whom she sought to remove from slurping at the public trough. Similarly, she had to contend with mutiny of some less-principled Conservatives who were more concerned about being liked than in mending the UK’s broken economy. Fearlessly, Thatcher withstood vilification, back-stabbing, and unpopularity. She was determined to revitalize the UK’s moribund economy. She knew there was no point in returning to the failed status quo ante.</p>
<p>What saved her political career and the eventual economic turnaround for the country was one of those historical “wild card” events—the Falkland Islands War against Argentina in the South Atlantic in 1982.</p>
<p>The unpopular Argentine junta sought to appeal to patriotic sentiment to divert attention from their unpopular domestic policies by sending the Argentine military to reclaim the Falklands from the UK. It would have been easy for a leader already beleaguered by economic stagnation to rationalize that those remote, almost insignificant islands weren’t worth fighting over, but there was a principle involved: The Falklanders (fewer than 2000 in number) considered themselves British citizens, and valued the rights that being a British citizen included.</p>
<p>Thatcher was not about to abandon those loyal patriots. She mobilized the British navy, which proceeded to engage in combat with the Argentine military, driving them out and securing possession of the Falklands. In doing so, Thatcher gained instant “street cred” with the aggressors and potential aggressors of the world, and she also restored British pride and won the reelection that was necessary to give her major economic reforms time enough to work. And work they did, setting the UK economy on an overall upward trajectory for the next quarter-century.</p>
<p>On another policy front, Mrs. Thatcher had reservations about the EU and the euro currency. Many political opportunists, including some in her own party, were seduced by the siren song of the EU and the euro currency, and they criticized Thatcher for being old-fashioned and backward-looking. Today, as we survey the lurching national crises and the ethically questionable machinations of undemocratic and unaccountable eurocrats, Thatcher’s reservations can now be regarded as prescient and prudent. Her compatriots should be grateful for her wisdom in keeping the UK from becoming entangled in that increasingly lawless and illiberal quagmire.</p>
<p>As we remember Margaret Thatcher, we Americans should be grateful for her strong support of President Reagan as he strove to eliminate the Soviet threat. Although there were some disagreements</p>
<p>between these two spirited, strong-minded leaders, their partnership was crucial. One of Lady Thatcher’s finest moments—one that should touch the hearts of all patriotic Americans—was her moving eulogy to Pres. Reagan. Already suffering some physical decline at that time, she recorded her remarks on camera so that her own infirmities would not detract from the proper focus on our own fallen leader. It’s great stuff. Watch it some time when you want to feel good.</p>
<p>One final thought about this great woman: Her climb up from humble origins to become one of the most influential leaders of the 20<sup>th</sup> century is in many ways a quintessentially American story. It resonates with us. Her ascent was achieved by diligence, persistence, and strength of conviction. I can’t tell you how many bright, promising undergraduate women to whom I have introduced Margaret Thatcher as one of my few heroes. I love the response in their eyes as the fire of hope and inspiration is kindled in them when I tell them the story of the grocer’s daughter who became one of the great Brits of all time and one of the most important national leaders of the 20<sup>th</sup> century.</p>
<p>Rest in peace, dear lady. You will be missed and remembered.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/remembering-the-iron-lady/feed/</wfw:commentRss>
		<slash:comments>36</slash:comments>
		</item>
		<item>
		<title>The Marxist Roots of Obama&#8217;s War on the Middle Class</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/the-marxist-roots-of-obamas-war-on-the-middle-class/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=the-marxist-roots-of-obamas-war-on-the-middle-class</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/the-marxist-roots-of-obamas-war-on-the-middle-class/#comments</comments>
		<pubDate>Mon, 01 Apr 2013 04:42:17 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Lenin]]></category>
		<category><![CDATA[Marx]]></category>
		<category><![CDATA[Obama]]></category>
		<category><![CDATA[taxation]]></category>
		<category><![CDATA[war on middle class]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=183798</guid>
		<description><![CDATA[Guess how Marx and Lenin sought to destroy the "bourgeoisie"?]]></description>
				<content:encoded><![CDATA[<p><a href="http://frontpagemag.com/2013/mark-hendrickson/the-marxist-roots-of-obamas-war-on-the-middle-class/obamam2/" rel="attachment wp-att-183890"><img class=" wp-image-183890 alignleft" title="obamam2" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/03/obamam2.png" alt="" width="241" height="161" /></a>How many times have you heard President Obama express concern for the middle class? More than you can count, I&#8217;m sure. If you are in the middle class, Obama’s frequent mentions of you should make you very worried. A key part of Obama’s <em>modus operandi</em> is his habitual use of verbal misdirection—saying one thing and then doing the opposite.</p>
<p>This is a man who will affirm the truism, “none of us can predict with certainty what the next big industry will be,”  and then, fifteen minutes later, propose increased federal spending in industries that he favors, such as green energy. (He did this in his 2011 State of the Union address.) He has earnestly told us that federal deficit spending is “not sustainable,” and then merrily continued with his budget-busting spending plans. Obama has promised “no more bailouts,” only to endorse (in the same speech—his 2012 SOTU address) the Dodd-Frankenstein monster known as “the Consumer Financial Protection Bureau,” that effectively guarantees future bailouts for big banks.</p>
<p>Obama pays lip service to the middle class because he needs their votes, but he is no friend of the middle class. Right from the start, he has favored big business at the expense of the middle class. (See, for example, Timothy P. Carney’s detailed account, <em>Obamanomics</em>.)</p>
<p>It is well known that Obama is a disciple and practitioner of the strategy and tactics of the late revolutionary Saul Alinsky, who despised the middle class, denigrating them as “materialistic, decadent… degenerate… and corrupt.” (For a well-researched discussion of the Alinksy link, read Chapter 3 of James R. Keena’s excellent book, <em>We’ve Been Had</em>.)</p>
<p>Karl Marx was another writer whose influence on Obama is well known. Marx railed against the middle class, fulminating in <em>The Communist Manifesto</em>, “The middle class owner of property&#8230;must be swept out of the way and made impossible.” Elsewhere in the <em>Manifesto</em>, Marx called for “the violent overthrow of the bourgeoisie.”</p>
<p>Building on Marx’s concepts, Lenin sought the destruction of the bourgeois class and its values, recommending, as the strategy for annihilating the middle class, “grind[ing] them between the millstones of taxation and inflation.”</p>
<p>Is Obama acting on the basis of this Marxist-Leninist animus against the middle class? Certainly, nobody can honestly argue that middle-class Americans as a whole have prospered under the Obama administration. The official unemployment rate has remained stubbornly high, while the <a href="http://data.bls.gov/timeseries/LN11300000">percentage of adult Americans working</a> has declined to historic lows. Meanwhile, during the Obama era, median family income has dropped several thousand dollars while the <a href="http://money.cnn.com/2012/06/11/news/economy/fed-family-net-worth/index.htm">median net worth</a> of Americans has dropped as much as 40%. Meanwhile, savers earn microscopic returns and effectively grant interest-free loans to the government as a result of the Federal Reserve’s zero-interest-rate policy.</p>
<p>Such dismal data should be of no surprise to anyone who understands economics. <a href="http://www.forbes.com/sites/markhendrickson/2012.07/19/obama-strays-from-the-script-reveals-an-ideology-hed-prefer-to-hide/">Obama’s ideology</a> is plainly Marxian, shown in his antipathy for entrepreneurs (“you didn’t build that”). As I have argued <a href="http://www.forbes.com/sites/markhendrickson/2012/07/26/president-obamas-marxist-leninist-economics-fact-and-fiction/2/">elsewhere</a>, Obama’s economic policies have been those of a dedicated Marxist-Leninist. He has worked to advance the implementation of all ten planks in Marx’s “Communist Manifesto,” outlining how to impose socialism incrementally.</p>
<p>As for Lenin’s fiendish plan to crush the middle class with taxes and inflation, Obama has increased taxes by over $6 trillion (I refer here to Obama’s deficits, which are taxes that will fall on future taxpayers) and the Federal Reserve inflationary dollar-creating policy (“quantitative easing”) that already is eating away at the purchasing power of the dollar while sowing the seeds of severe future inflation. Many Americans have been beguiled by Obama’s rhetoric about raising taxes on “the rich.” They overlook the mathematical fact that “the rich” (even as liberally defined by Obama) don’t have enough money to keep the Obama/progressive wealth redistribution game going, and that, sooner or later, the heaviest economic burden will have to fall on the middle class.</p>
<p>The American middle class should never underestimate an ambitious politician’s willingness to impose economic hardship on the country to achieve his political goals. Indeed, Obama is far from the first Democrat to take advantage of the “<a href="http://www.forbes.com/markhendrickson/2012/05/31/president-obamas-wealth-destroying-goal-taking-the-curley-effect-nationwide/">Curley effect</a>,” but he may be the most zealous. Apparently influenced by the Cloward-Piven stragtegy of bringing about the financial collapse of the U.S. by overloading government transfer programs, Obama has presided over explosive growth in the number of Americans on the food stamps program and federal disability.</p>
<p>Large segments of the American middle class either do not understand what Obama is trying to do, or else they have been intellectually crippled by “higher education,” causing them to suffer from the delusion that Obama’s path is righteous and just. An earlier, non-Marxian commentator on the American scene, the acerbic H. L. Mencken, scornfully referred to the American middle class as “the booboisie,” and expressed his cynicism in the memorable and currently apropos aphorism, &#8220;Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”</p>
<p>Lenin once gloated, “The capitalists will sell us the rope with which we will hang them.” He was wrong, because the inherent flaws of socialism collapsed the Soviet Union. But, as Emerson once said, “A nation never falls but by suicide,” so while we avoided selling the fatal rope to a foreign enemy, we might have elected our own hangman.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/the-marxist-roots-of-obamas-war-on-the-middle-class/feed/</wfw:commentRss>
		<slash:comments>54</slash:comments>
		</item>
		<item>
		<title>Cyprus and the Rotten Union of Big Government &amp; Big Finance</title>
		<link>http://www.frontpagemag.com/2013/mark-hendrickson/cyprus-and-the-rotten-union-of-big-government-big-finance/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=cyprus-and-the-rotten-union-of-big-government-big-finance</link>
		<comments>http://www.frontpagemag.com/2013/mark-hendrickson/cyprus-and-the-rotten-union-of-big-government-big-finance/#comments</comments>
		<pubDate>Thu, 21 Mar 2013 04:16:05 +0000</pubDate>
		<dc:creator><![CDATA[Mark Hendrickson]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Banks]]></category>
		<category><![CDATA[confiscation]]></category>
		<category><![CDATA[crisis]]></category>
		<category><![CDATA[Cyprus]]></category>
		<category><![CDATA[deposit]]></category>
		<category><![CDATA[Tax]]></category>

		<guid isPermaLink="false">http://frontpagemag.com/?p=182350</guid>
		<description><![CDATA[A significant move is underway toward rule by lawless global bureaucracies. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://frontpagemag.com/2013/mark-hendrickson/cyprus-and-the-rotten-union-of-big-government-big-finance/130318115052-cyprus-protests-police-620xa-3/" rel="attachment wp-att-182459"><img class="alignleft  wp-image-182459" title="130318115052-cyprus-protests-police-620xa" src="http://cdn.frontpagemag.com/wp-content/uploads/2013/03/130318115052-cyprus-protests-police-620xa2-441x350.jpg" alt="" width="265" height="210" /></a>Everyone in the financial community and at the top levels of governments around the world has one eye trained on the Mediterranean island nation of Cyprus now.</p>
<p>Unless you’ve been isolated from the media, you’ve probably heard that over the weekend, the government of Cyprus announced a tax on bank deposits to rescue the banks from potential insolvency. The term “bail-in” has been coined to differentiate between a taxpayer bailout (i.e., rescue funds coming from outside the bank) since in this case, at least some of the cost of rescuing the bank is coming from money already within the bank.</p>
<p>For the moment, the Cyprus government has retreated and stated that they have decided not to impose the tax; nevertheless, serious damage has been done. Money and banking ultimately depend on people having confidence in their soundness and integrity. It’s hard to see why, going forward, anyone would risk depositing money into a Cypriot bank if the government seems inclined to raid those accounts without notice. (That having been said, we should note that the Argentine government has confiscated a portion of bank deposits in their country in the past, yet banks still function in Argentina.)</p>
<p>The banking crisis in Cyprus is similar to the one that occurred in Iceland about five years ago. In both cases, the banks in those small island nations had balance sheets that were far larger than the modest GDPs of their respective countries. Iceland’s government bit the bullet, let the banks go broke without a taxpayer bailout. The Icelanders went through tough times for a couple of years, suffering a sharp devaluation of their currency, but now they are on the mend and credit markets have been restored. Cyprus, however, uses the euro, and so does not have the option of a currency devaluation.</p>
<p>Indeed, the government in Cyprus lacks the independence that the government in Iceland had. The European Central Bank and the International Monetary Fund are exerting heavy pressure on Cyprus’s government to implement the tax on deposits. They seem to be making an offer that the Cypriots ultimately might not be able to refuse. This power play raises several profound and unsettling questions.</p>
<p>The famous gold analyst, Jim Sinclair, triggered a tsunami of lurid speculations stemming from the fact that powerful Russian interests—allegedly, an old KGB network that enriched itself by looting valuable assets from the corpse of the Soviet state and parked huge hordes of cash in Cypriot banks —were the primary target of the proposed confiscation (tax). Sinclair averred that those hardball-playing Russians were the last customers in the world that the IMF and ECB should want to antagonize. Would the Russians send a message by taking out someone who helped to hatch the “bail-in” scheme? Would they try to destabilize the euro using whatever ability they have to rock markets? Would the Federal Reserve and ECB pay off the Russians by giving equivalent financial assets to them to keep them from doing some dastardly deed? Who knows? Such possibilities are titillating, although purely conjectural and possibly completely fantastical.</p>
<p>What should concern us all is the state of banking in the world today.</p>
<p>The banking crisis in Cyprus is the latest evidence that Big Government and Big Finance are joined at the hip. Iceland appears to be an outlier. In most parts of the world, politicians act as though they cannot afford to let market discipline put an end to error-prone banks.</p>
<p>The bailout/bail-in paradigm makes a mockery of the rule of law. I’ve been saying for several years that the major central banks of the world are essentially lawless. I’m not a lawyer, so technically I may be incorrect, but it seems to me that the central banks do whatever they feel they have to do—break contracts, abrogate property rights, purchase assets, dole out new funds created out of thin air—to prop up decrepit, bankrupt financial institutions because the deeply indebted governments of the world cannot continue to operate without the ready availability of complicit, dependent big banks to maintain a functioning infrastructure to accommodate their trillions of dollars of low-value paper. The last thing that those holding high office in governments want is for the whole rotten, rickety financial, economic, political status quo to come crashing down, so they willingly turn a blind eye to central banks’ creative interpretations of law and give them carte blanche to do whatever they must to keep the game going.</p>
<p>The inexorable trend of this “rule of expediency” in place of the rule of law is increasing centralization of power and the progressive absorption and confiscation of wealth for the state’s purposes. Compounding the ugliness of this grim process is the fact that the key decisions and policies are made by unelected officials. Central bankers are accountable to the governments that appoint them in a technical de jure sense, but in a de facto sense, they have free rein. Even less accountable are those who run the IMF. This mid-‘40s monstrosity was one of the first multilateral agencies to be created. The American official who helped to set up this bureaucracy designed to redistribute wealth from American and European taxpayers to often corrupt and illiberal governments was Harry Dexter White, who turned out to be a secret member of the Communist Party. If he were here today, he would have the satisfaction of seeing his baby sitting astride the financial system of the globe, dispensing billions of dollars and dictating policies to once-sovereign governments.</p>
<p>In short, there is a lot more at stake in Cyprus’s banking crisis than the ultimate fate of a Russian cabal’s loot or even the fate of the euro currency itself. This is a significant step on the road away from liberty and sovereignty and toward rule by illiberal global bureaucracies.</p>
<p><strong>Freedom Center pamphlets now available on Kindle: <a href="http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Ddigital-text&amp;field-keywords=david+horowitz&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;ajr=0#/ref=sr_st?keywords=david+horowitz&amp;qid=1316459840&amp;rh=n%3A133140011%2Ck%3Adavid+horowitz&amp;sort=daterank">Click here</a>.</strong></p>
]]></content:encoded>
			<wfw:commentRss>http://www.frontpagemag.com/2013/mark-hendrickson/cyprus-and-the-rotten-union-of-big-government-big-finance/feed/</wfw:commentRss>
		<slash:comments>9</slash:comments>
		</item>
	</channel>
</rss>

<!-- Performance optimized by W3 Total Cache. Learn more: http://www.w3-edge.com/wordpress-plugins/

Object Caching 1448/1533 objects using disk
Content Delivery Network via cdn.frontpagemag.com

 Served from: www.frontpagemag.com @ 2014-12-31 07:54:48 by W3 Total Cache -->