Tag Archives: Economics

Commentary

Indian economist distinguishes between rights and entitlements

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From the Times of India, a good economics article from Swaminathan S Anklesaria Aiyar. (H/T Shalini)

Excerpt:

Politicians and activists constantly propose new rights — the right to work, to education, and now to food. The word “rights” is being twisted to mean entitlements, and there is a big difference.

Rights are freedoms from oppression by the state or by society (through ethnicity, religion and gender). These rights do not entail government handouts.  Entitlements, however, are welfare measures entailing government handouts. Rights are not limited by budget constraints, but entitlements are. So, rights are universal but entitlements are not.

[…]US economists calculate that three welfare measures — social security (for the aged), Medicare (for the aged) and Medicaid (for the poor)—will triple from 7% of GDP to 20% in the next decade, swallowing up virtually all federal tax revenue. Jagadeesh Gokhale of the Cato Institute calculates that, including social security, the US is headed for a national debt that’s 500% of GDP, and Europe of 434%.

Some much for entitlement spending. He then explains the origin of human rights in Britain, America and France, and then says this:

These three countries spearheaded the concept of fundamental rights. In all three, rights were about freedoms, not entitlements

In subsequent centuries, people said this was not enough, and proposed entitlements — which some called second-generation rights. Marxists declared that rights to free speech, elections and personal freedom were bourgeois illusions that did not empower the poor. So Lenin proposed a dictatorship of the proletariat that took away all basic freedoms, and instead offered the right to food, shelter and work. Mind you, nobody could sue Lenin for poor provision. Nobody could throw out Mao for the Great Leap Forward that killed 30 million people. Nobody could topple Stalin for murdering four to six million peasants in the Ukraine.

The communist experience shows that giving welfare rights priority over basic freedoms is the road to serfdom. And the capitalist welfare state now shows that entitlements, although desirable and inevitable in democracies, must be limited and targeted at the needy, so that they do not hog all spending or bankrupt governments.

It’s amazing. He’s more American than the Democrats, because he actually understands America. Thanks so much for finding this article, Shalini!

By the way, if you want to learn what the end-game is for the Democrats, you can read “The Road to Serfdom” by the Nobel Prize-winning economist F.A. Hayek, which Swami alluded to in his article.

News

Intel CEO blames Democrats for destroying the economy

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Article from CNET News by someone who understands job creation. (H/T Neil Simpson’s latest round-up)

Excerpt:

Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

Otellini’s remarks during dinner at the Technology Policy Institute’s Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: unless government policies are altered, he predicted, “the next big thing will not be invented here. Jobs will not be created here.”

The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe–this is the bitter truth.”

[…]Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: “I think this group does not understand what it takes to create jobs. And I think they’re flummoxed by their experiment in Keynesian economics not working.”

Here’s Republican Senate candidate Carly Fiorina, from the same article:

The comments from Intel’s chief executive echoed statements made a day earlier by Carly Fiorina, the former HP CEO turned Republican Senate candidate.

America’s skilled-worker visa system is so badly broken and anti-immigration that “we have to start from scratch,” Fiorina said, adding that too many government policies push jobs overseas instead of making U.S. companies competitive against international rivals.

“Our corporate tax rates are the second highest in the world,” and Congress has repeatedly failed to make an R&D tax credit permanent, Fiorina told the Aspen audience. It’s time to start “acknowledging the reality that companies go where they’re welcome,” she said. (The effective U.S. corporate income tax is 35 percent, far over the industrialized-nation average of 18.2 percent.)

Here’s a recent IBD article with more from Otellini, and other CEOs

First Otellini:

“I can tell you definitively that it costs $1 billion more per factory for me to build, equip and operate a semiconductor manufacturing facility in the U.S.,” he said. And 90% of that added cost, he said, is due to taxes and regulations that other countries don’t have.

Then other CEOs:

Earlier in the week, Illinois Tool Works CEO David Speer, whose company employs 60,000 worldwide, laid out his dilemma — and that of hundreds of other CEOs: “I could borrow $2 billion tomorrow for 3 1/2%,” Speer said. “But what am I going to do with it?”

[…]In June, Ivan Seidenberg, CEO of Verizon Communications and head of the Business Roundtable, warned of a growing anti-business slant in both Congress and the White House. Tax hikes, regulations and constant policy shifts, he said, “harm our ability … to grow private-sector jobs in the U.S.”

And don’t forget the costs that Obamacare imposed on companies, causing all medical premiums to go through the roof because of the new health care mandates and taxes on things like medical devices.

Red State explains what the Obammunists should be doing:

As our government continues to make it more difficult to do business in the US, companies must increasingly look to more favorable climates abroad. If Washington really wants to spur job creation here in the US, they should repeal the health care overhaul, reduce spending, cut the corporate tax rate, give up on cap and trade, and reform litigation. Instead we have been treated to an extended experiment in government control – one that is obviously not producing new wealth, new jobs, or any real hope for the emergence of the industries of the future.

It takes a lot of courage for a CEO like Otellini to come out against the Obama administration, and the neo-Keynesian oligarchy in Washington. Taking a billion dollars from Intel to study Chinese prostitutes and to build turtle tunnels is not a good thing to do if you want to have more jobs. But the thing is – Obama thinks it is a good thing to do, because he is totally ignorant of how the economy works. So, don’t vote for him or any of his silver-spoon limousine liberal friends who were born with rich parents. Democrats don’t know how jobs are created.

News

How Obama’s bold experimentation with the economy costs jobs

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Consider this column by George Will. (H/T ECM)

Excerpt:

At any time, some economic conditions would be better than others, but the more certainty about conditions the better. Today, investors and employers are certain that uncertainties are multiplying.

They are uncertain about when interest rates will rise, and by how much.

They do not know how badly the economy will be burdened by the expiration, approximately 200 days from now, of the Bush tax cuts on high earners — aka investors and employers. They know the costs of Obamacare will be higher than was advertised, but not how much higher. They do not know the potential costs of cap-and-trade and other energy policies.

They do not know if “card check” — abolition of the right of secret ballot elections in unionization decisions — will pass, or how much the economy will be injured by making unions more muscular. They do not know how the functioning of the financial sector will be altered and impeded by the many new regulatory rules and agencies created by the financial reform legislation.

The economy has become dependent on government stimulation of demand, and no one knows what will happen as the stimulus spending wanes.

Investors and employers are watching all of Obama’s bold experimentation with the economy patiently, and keeping their money in their wallets. Who can afford to hire more workers when the costs of running a business or making a profit on an investment goes up and up and up? When Obama is kicked out of office in 2012, and the economy settles down, then employers and investors will breathe a sigh of relief and hiring can resume.