Friday, June 20, 2014

What socialists don't get

 This is a great summary of the economics socialists don't get. Too good not to cut and paste from NCPA:

While today's political climate is tense, agreement on some essential economic truths could help lawmakers get things done in Washington, says Jeffrey Dorfman, University of Georgia economics professor.
Dorfman identifies 10 important economic facts that he says policymakers need to recognize:
  • Government only reshuffles wealth, jobs and income; it cannot create anything on its own, as it has to take money from some in order to spend it on others. Any money collected or jobs "created" by government merely replace the private sector investment and job creation that would have occurred had people been allowed to spend their own funds.
  • Income inequality does not harm the economy. While the poor spend nearly all of their money, higher-income earners save some of their income, which is just as good for the economy as spending, if not better. Saving leads to more investment and greater national income in the long run.
  • Paying low wages is not corporate exploitation. Just as businesses have to set prices according to consumer demands, they establish wages based on the supply and demand for labor.
  • Environmental over-regulation drives up prices. Because the poor spend a greater percentage of their income, especially on energy, such over-regulation acts as a regressive tax.
  • Education is not a public good. While we publically fund K-12 education, it produces human capital that is privately owned by each person. While many defend public education because it is a "public good," it is important to realize that the ensuing benefits of education are not given away for free.
  • CEO pay may be high, but so is the pay to athletes and movie stars. Such pay may reduce a company's profits, but it does not reduce the pay of other employees, as their pay is determined the marketplace.
  • Consumer spending does not drive the economy. Saving more and spending less of our income will lead to greater wealth in the long run.
  • "Free" things provided by the government are typically low-quality and unnecessarily expensive.
  • Injustices happen. The government cannot correct every injustice, and every time the government steps in to "fix" something, it puts costs on someone else. Affirmative action policies, for example, grant college admissions only by denying admissions to other applicants.
  • There is no such thing as a free lunch. "Free" government services cost money. Similarly, raising the minimum wage gives money to employees only by taking away jobs and raising prices for consumers.
While liberals often focus their policy arguments on compassion, compassion cannot trump basic economic truths, writes Dorfman. All too often, government policies have unintended -- and harmful -- consequences.
Source: Jeffrey Dorfman, "10 Essential Economic Truths Liberals Need to Learn," Forbes, June 5, 2014.


gravedodger said...

Well discovered Lindsay, if only our pathetic media could balance their pimping of the poor garbage with some basic common sense information such as that post.
It is not as if their inane rubbish ever reaches those at the bottom who need to know these truths as a first step to self help and to overcome the agenda driven clods who treat the underprivileged as their voting base with nothing but ignore.

Anonymous said...

Anyone who argued in favour of a flat earth, of phlogiston, would be ridiculed from every end of the political spectrum - from Christian creationists to hardcore pagan liberals.

Anyone who disagrees with any of these basic tenets of economics should be treated the same way.

And yes, this does mean every single political party in NZ - including ACT, now they're promised to keep every cent of Key's welfare spending...

Anonymous said...

Thank you Lindsay; agree with "gravedodger" above.
Notice it's not just liberals that are ignorant, but you hear National politicians proclaiming THEY created X jobs; $X value ~ it's cringe-worthy

Psycho Milt said...

Dorfman seems to need some remedial work on the meanings of the words 'truth' and 'facts.' They're not synonymous with the words 'beliefs' or 'claims.' Understanding that could help lawmakers quite a bit too.