So what we’ve seen so far in our attempt to understand the philosophical divide, the choice before us, is that the Democrat Party believes the government creates jobs, apparently from out of thin air. Yet, historically, jobs are created by individuals, and even when the government gives out contracts or orders things like infrastructure building, the money actually used to pay for those jobs comes from individuals paying taxes…thus from their private jobs. The government has no private stash of money to pay for things. Thus, if the economy grows then more dollars can come into government and then be used for useful things like building roads or the common defense of the country, but if the economy does not grow, the government cannot merely keep taking money for “government jobs” because eventually the country runs out of money.
Connected to this, as I pointed out last week, more government always means less individual freedom. So many miss this point that I should probably do another post just on this point, but for now, what I can point to is our own revolution. At its root, our Revolution in 1776 was simply about individual freedom—Sam Adams, PAtrick Henry and the gang wanted to be in total control of their own lives. That King George III thought he could, through the Parliament, express HIS control through more taxes, rules about business and ideas about where we could or could not live is what pushed us into a battle over “our rights.” Today, in 2012, the government has more power than King George III ever dreamed of having, meaning we individuals have less freedom than ever.
Quick story to make the point: my birthday is in August, meaning that by the end of the month, I have to pay my tax to the state of Florida in order to drive my perfectly fine Ford F-150 on the streets. You know this as merely “renewing your tags,” but make no mistake—it is a tax and it is a reduction in my individual freedom. Well, due to a variety of circumstances, it didn’t get done, and my daughter was out driving the truck when a friendly officer decided to stop her for the tag. Fortunately, all she got was a warning, but the point was made. “You cannot drive this truck on our streets without us saying it’s okay.” Note, the truck wasn’t smoking nor dragging a bumper. She hadn’t run a stop sign or ran over some biker. Nope–the point wasn’t about some danger or error, but merely a level of government control through an annual tax on a vehicle. If King George could have played that card (“hey, how about we tax them once a year for new horseshoes on every horse they own”), he would have been pumped.
More government ALWAYS means less individual freedom
So, last time, I ended with this: Last point here—more government ALWAYS means less individual freedom. The government uses its power to control its citizens. Again, note, I freely admit that some rules we all agree with, such as a speed limit or seat belt laws. Yet, even those are rules that limit individual freedom. But wait, you might think…didn’t more government work under President Clinton? I mean, that’s what he is running around saying—when the REpublicans tried less government it was bad, but when Clinton ran things he had lots more government and the ’90s rocked.
President Obama’s video, “The Choice,” finishes his critique of the Republicans with the damning “we tried that top down approach; its what caused the mess in the first place.” Is that true? President Clinton has joined the fray with his own commercials talking about how the Democrats plan is the same now as when he was in office, and back then, things were great.
Well, this is an example of creatively re-writing history. What neither Clinton nor Obama admit is that the choices of President Reagan and President H.W. Bush, along with the Republican Congress of 1994’s “Contract with America” were the key ingredients of our country’s financial success.
Let’s go back to the 1970s. Though the principle of Keynes still ruled supreme in the country, with both Democrats and Republicans choosing his economic teachings of more government spending along with accepting rising inflation (higher costs to consumers), the economy stalled. Presidents Nixon, Ford and Carter all tried to spend their way out of trouble, but it all failed. President Reagan had a different idea, based on the economic teachings of Friedrich von Hayek.
That plan was fairly simple—cut taxes so everyone had more of their own money, cut back on government regulations (so less red tape in order to do things), and have the government spend less money (less government programs, connecting points 1 and 2). By doing these things, so the plan proposed, the economy would recover. As people made more money, their businesses would grow and they’d spend even more money. So, even with less taxes as a percentage, the total money coming into the government would not actually be less money, or if less, then only less by a little.
And, that is exactly what happened by the late 1980s and into the 1990s. Note, the reduction in government was not well-received by most on the left, and certainly not among poorer people who counted on the food stamps and government programs. And Reagan did raise spending in military defense, so in that sector, there was no decrease in government involvement. Reagan wasn’t perfect.
Later, President H. W. Bush actually did raise taxes to deal with the government wanting more money in order to balance the budget (instead of just spending less). It should be noted that in my opinion, President H.W. Bush (and his son) aren’t really conservative compared to President REagan but are rather moderates. I think a compelling case can be made that Bush, Clinton, and Bush all governed in much the same way, with only small differences in certain, narrow specifics. But those new taxes were very modest and really did not alter the major change from Reagan…a much lower overall Income tax in order that everyone had more money in their pocket each month.
So, H. W. Bush kept much of Reagan’s monetary policy in place, and Clinton did not make any significant changes when he took office in 1992. Then, once the 1994 election happened, Clinton had to continue to work with Reagan’s economic plans since the Republican Congress was determined to continue balancing the budget, which they did.
As many remember, the 1990s were a time of great economic increase. Hayek’s argument for a stronger economy was born out by the day to day experience of everyone in the 1990s. The 90s were the decade of the Yuppies and the dot-com millionaires. Sure—were their poorer people? Yes, I was one of them. I got married in 1989 and my family’s income in 1990 was about $18,000. In 1993, I was let go from my job when I asked for a raise to $25,000. There weren’t millions running around for everyone, but there never has been in any place at any time in world history. That has never been the point—that everyone somehow gets rich. Instead, Hayek’s view can be understood in the old adage that “it’s better to be a poor man in a rich country, than a rich man in a poor country.” Or, “a rising tide lifts all boats”—your boat may only be a rowboat, but it’s riding high in the water (metaphorically meaning you are financially well-off, better-off, than riding low in the water). It is always amazing to me how quickly many are to praise the 1990s has being a great economy and financial experience, yet to give none of the praise to Reagan who put it all in motion.
A Review of the Democrat Plan
Let’s close with a look at what President Obama said in his video, or has said in other settings. Of course he plans to strengthen the middle class, though he typically leaves that undefined. In general terms, the Democrats see a stronger middle class coming from more government activity.
He promises to pay down the debt, though you should note that he doesn’t tell you that the great amount of debt was created by himself. His administration has greatly expanded the debt, mostly through giving away money to big businesses and banks….yep, Obama has paid off rich people. Thus, apparently, the only real “evil rich” are the ones who vote Republican.
He goes on to mention a desire to “Invest in Education,” a laudatory act of course, but realize our education is now among the worst among the major, wealthy countries….and we ALREADY spend billions on education. In other words, we already have the government deeply involved in education and doing so has merely made things worse. So, the Democrat plan is continued government involvement, funding (leads to the debt), and historically has provided no improvement in education itself.
He wants to have more government “invest in manufacturing.” So, just like with education, the Democrats want to increase government involvement, funding (again, this leads to more debt). More regulation = more red tape and less personal creativity and investment.
Invest in “American Energy”—this is the last of the Democrat plans discussed in the video. Not surprisingly this is continued government involvement, funding (leads to the debt), but this is also part of going Green, regardless of cost to move beyond oil…typically means not supporting coal, coal shale, oil, gas refineries.
For Obama, these three “Investments” will create “good Middle Class jobs” and thus, due to more government, create a stronger middle class….a middle class largely dependent upon government for it’s better condition. The question then for the Democrats will be just how long they can continue to pour money into sustaining these poor people, whoops, the middle class—a middle class impoverished by the government itself, ripped from its historic foundation of individual liberty.
For many, I think the appeal of Obama is an aggressive “get those stinking rich people.” This rage was seen most recently in the movie The Dark Knight Rises. That movie, of course, reflects back on the French Revolution…another moment when the poor rose up to attack and destroy the rich. It is a fair feeling. “Why should that person have so much more money than I do?”
I will concede, and even agree, that since the 1990s, we have seen an extreme wealth that deeply separates an upper percentage (I would put that at more like 10% or maybe even 15%) from the rest of us. Someone who clears $120,000 a year is bringing home $10,000 a MONTH—they certainly have enough money. I personally have lived, with children on less than $25,000, so they can live on less.
Perhaps, then, those making $150,000 or even $100,000 should pay more taxes. Maybe they can afford it. Historically, though, this is not as successful as we would hope. All it really ever does is strengthen the government, not the poor people government proposes to help. Historically, then, an empowered government, whether a King, a nobleman, a religious group or elected legislature, can easily, and DOES EASILY trample the rights of individual citizens.
A Recap
I know we are running long here, perhaps much longer than normal, but the stakes are high. So, here’s a recap in case you want to distill the main points down for someone eager to understand the differences.
Two views of strengthening the Middle class—the Democrats plan is dependent upon more government; the Republican plan is dependent upon more personal freedom.
The Democrat plan wants more government in order to bring more power to a centralized place, thinking that people simply cannot provide for themselves (think how the Progressives viewed the poor in the early 1900s), and thus the Democrats need to take money from everyone else (who they get it from is part of the debate); the Republican plan places more personal responsibility on each person, that it is not “my job” to pay for “you” if you don’t have a job, don’t have good health and so forth, and thus the Republicans prefer to leave more money with people, even if that means some get very rich.
Where do jobs come from—history teaches not from government, but from the private sector, which does that when it is allowed to keep its own money.
More taxes leads to more money in the hands of government, and history teaches that when you give more money to government, they do things that are not good or helpful.
More taxes in government typically leads to more rules and regulations, and that means more red tape, and less creativity and new businesses, less jobs for the country.
Taxes only on the rich never happens—it always rolls down to us, either in higher prices on goods or just more direct taxes on the middle class.
Government is already too wasteful with the money that it has, thus it needs to do less, not more.
More government ALWAYS means less individual freedom
Clinton’s success in the 1990s was built upon the “top down approach” that Obama blast. Reagan made significant changes to our economic position coming out of the disastrous 1970s (could say 60s-70s).
Perhaps the real answer lies in a return to our historic American values that cherished community, based on Christianity, where we each took care of one another out of our love, our sense of community connection. The Democrats recently wanted to vote God out of their platform, what they stand for, because they don’t want to support our Christian background. Thus, in one sense, they are trying to enforce, to make people, hold to Christian values of mutual support, “brotherly love,” the “one another commands” WITHOUT actually having the Christian foundation. History tells us that when you try to force values on people, as the Democrats are trying to do, that path only leads to despotism, to “might makes right” and to a sense of rebellion.
We do indeed have a Choice. A return to the government as created by the Founders or a continued move to more government power, government control.