Category Archives: Economy
Is America a Republic or a Democracy?
Jay Davidson

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Thoughts regarding A New Trumpet for Democracy
Our form of government is strong, persistent and thriving.  But its not a Democracy…Nor do you want it.  All Democracies devolve into the tyranny of the many over the few.  Democracies are like two wolves and one sheep voting what’s for dinner.  What is the one overriding theme of all Democrat legislation?  It is to increase the size, scope and power of the federal government.
Where in all the Founding Documents do you find the word Democracy?  Nowhere.  In fact, the original documents went out of their way to prevent Democracy.  The Electoral College is the only remaining body solely placed to prevent Democracy.
America is, or was intended to be, a Republic of independent states whose governing bodies are constrained by the Constution, the Amendments and the Bill of Rights.  Or it used to be.  I find it highly disappointing when well-informed people, like this author, fail to discern the reality of democracy versus a Republic. a-new-trumpet-for-democracy- 1513812104?mod=djemMER

A New Trumpet for Democracy Contrary to his isolationist reputation, the president echoes Reagan in affirming America’s founding values.
Judy Shelton

President Trump outlines his National Security Strategy, Dec. 18. Photo: MANDEL NGAN/AFP/Getty Images

Ronald Reagan’s wisdom often went unappreciated in his day. In a 1982 address to the British Parliament, he presented a strategy to confront Soviet communism and other forms of dictatorship by championing American values. Commentators deemed it “naive” and “wishful thinking”—not to mention dangerous—to talk of advancing American principles and ideals. Why provoke hostility by trumpeting the superiority of democracy?

This Monday President Trump gave a speech outlining his National Security Strategy. Like Reagan 35 years ago, Mr. Trump celebrated the U.S. as a force for good in the world and cited America’s founding values as a powerful advantage against repressive regimes. The NSS document, which the White House released the same day, asserts the administration’s determination to protect American sovereignty by “defending the institutions, traditions and principles that allow us to live in freedom.” It identifies America’s fundamental source of strength: “we the people.”

Those expecting a more isolationist approach or a retreat from global engagement, especially with regard to championing American values such as democracy and individual rights, may be wondering whether Mr. Trump’s fundamental outlook has changed. What they need to understand—and the NSS makes clear—is that in today’s brutishly competitive world, in which rivals are actively seeking military, economic and political gains at U.S. expense, the American idea still reigns as the nation’s greatest competitive asset.

Prior administrations have used the NSS document primarily as an internal plan for coordinating policies among government agencies and departments. That Mr. Trump chose to present its key points directly to the public shows that he recognizes the global appeal of the American model of governance. Acknowledging that “we are not going to impose our values on others,” the document nevertheless affirms that the U.S. “will encourage reform, working with promising nations to promote effective governance, improve the rule of law, and develop institutions accountable and responsive to citizens.”

No one would accuse Mr. Trump of mushy sentimentalism when it comes to foreign policy. If he now embraces America’s founding principles as an advantage in the global arena, it is because he understands the potency of success as a countermeasure against ideologies hostile to freedom. He appreciates the value of a good brand—and America’s trademark represents the values that distinguish it from authoritarian regimes that treat their citizens as expendable.

The NSS document provides an operational blueprint for addressing specific threats to the U.S. and its citizens. It lays out four basic “pillars” aimed at protecting the homeland, promoting American prosperity, preserving peace through strength, and advancing American influence in the world. That last pillar defines the moral impact of America’s presence in the global arena—and how it redounds to the nation’s benefit by enhancing the prospects for peace and prosperity in the long run.

“The extraordinary trajectory of the United States from a group of colonies to a thriving, industrialized, sovereign republic—the world’s lone superpower—is a testimony to the strength of the idea on which our nation is founded, namely that each of our citizens is born free and equal under the law,” the document states. “America’s core principles, enshrined in the Declaration of Independence, are secured by the Bill of Rights. . . . Liberty, free enterprise, equal justice under the law, and the dignity of every human life are central to who we are as a people.”

Reagan’s speech 35 years ago called on democratic nations to join in reaffirming the power of ideas to change the world for the better, reminding their citizens to think of themselves as “free people, worthy of freedom and determined not only to remain so but to help others gain their freedom as well.” Wars initiated by tyrants had devastated whole continents; the best way to fight totalitarianism and its terrible inhumanity was by actively promoting freedom and democratic ideals.

Two years later, on the 40th anniversary of D-Day, Reagan noted at Normandy that the men who fought there had faith that what they were doing was right, faith that they fought for all humanity: “You all knew that some things are worth dying for. One’s country is worth dying for, and democracy is worth dying for, because it’s the most deeply honorable form of government ever devised by man.”

Mr. Trump’s National Security Strategy aims to rebuild U.S. economic and military strength. The goal is to keep the peace, so that soldiers will not have to make the ultimate sacrifice to defend America’s vital national interests, its principles and its way of life. But as the world has learned, to great sorrow and loss of life, there are no guarantees. “We know that American success is not a foregone conclusion,” Mr. Trump said Monday. “It must be earned and it must be won.”

Or as Reagan put it in 1982: “No, democracy is not a fragile flower. Still it needs cultivating.”

Ms. Shelton is chairman of the National Endowment for Democracy. She served on the Trump transition team.

Appeared in the December 21, 2017, print edition.

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Finding America’s Lost 3% Growth – Jay Davidson
ECONOMIC RECOVERY demands economic growth in the private sector.  Show me any nation that successfully grows its federal control and its economy.  This fact is the Achilles Heal of all Socialist, Communist and Democrat rhetoric.
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The best government is one that stays out of the private sector and lets market forces prevail.
Remember F.A. Hayek’s quote: “If a Socialist understood the economy, he would no longer be a Socialist.”
– Jay Davidson
Finding America’s Lost 3% Growth

For the original WSJ article, please go here.

If the country can’t grow like it once did, then the American Dream really is irretrievably lost.
By Phil Gramm and Michael Solon

Growth deniers are declaring that America’s economy has lost its ability to grow at 3% above inflation. If that’s the case, maybe we should go back to where we lost 3% growth and retrace our steps until we find it. For only with 3% or higher growth does America experience measurable progress in poverty reduction, strong job creation and income growth. If 3% growth is irretrievably lost, so is the American Dream.

Did America actually experience 3% real growth to start with? Yes. In the postwar era, the U.S. averaged 3.4% annual growth from 1948 through 2008. We averaged 3% growth for half of the George W. Bush presidency (2003-06). From 2009-12, the Obama administration, the Congressional Budget Office and the Federal Reserve all thought they saw 3% growth just around the corner. If the possibility of 3% growth is gone forever, it hasn’t been gone very long.

America enjoyed 3% growth for so long it’s practically become our national birthright. Census data show that real economic growth averaged 3.7% from 1890-1948. British economist Angus Maddison estimates that the U.S. averaged 4.2% real growth from 1820-89. Based on all available data, America has enjoyed an average real growth rate of more than 3% since the founding of the nation, despite the Civil War, two world wars, the Great Depression and at least 32 recessions and financial panics. If 3% growth has now slipped from our grasp, we certainly had it for a long time before we lost it.

So poor was our economic performance during the Obama presidency, with its 1.47% economic growth, that now many Americans believe 3% growth is gone forever. The CBO has slashed its 10-year growth forecast to a measly 1.8% per year. If we never see 3% growth again, our grandchildren may point to 2009 and say, “That was when the American economy ran out of gas.”

While Obama apologists like to claim that labor-productivity and labor-supply factors preclude 3% growth, most of the growth constraints we face today are directly attributable to Mr. Obama’s policies. The Bureau of Labor Statistics reports that labor-productivity growth since 2010 has plummeted to less than one-quarter of the average for the previous 20, 30 or 40 years. Productivity fell during the current recovery, not during the recession. With high marginal tax rates, especially on investment income, new investment during the Obama era managed only to offset depreciation, so the value of the capital stock per worker, the engine of the American colossus, stopped expanding and contributed nothing to growth.

Illustration: David Klein

A tidal wave of new rules and regulations across health care, financial services, energy and manufacturing forced companies to spend billions on new capital and labor that served government and not consumers. Banks hired compliance officers rather than loan officers. Energy companies spent billions on environmental compliance costs, and none of it produced energy more cheaply or abundantly. Health-insurance premiums skyrocketed but with no additional benefit to the vast majority of covered workers.

In a world of higher costs, productivity plummeted. Productivity measures the production of things the market values that flow from the employment of labor and capital. Try listing the Obama-era regulatory requirements that generated the employment of labor and capital in ways that actually produced something you buy.

True, America is aging. In 2006, when the labor force participation rate was 66.2%, the BLS predicted that demographic changes would push it down to 65.5% by 2016. Under Mr. Obama’s policies, it actually fell further, to 62.8%, and the number of working-age Americans not in the labor market spiked to 55 million.

By waiving work requirements for welfare, lowering food-stamp eligibility requirements and easing standards for disability payments, Mr. Obama’s policies disincentivized work. Disability rolls have expanded 18.6% during the current recovery, compared with a 16% decline during the Reagan recovery. The CBO estimates ObamaCare alone will reduce work hours by 2% and eliminate 2.5 million jobs by 2024. At the current 1% growth in the civilian population above the age of 16, a mere reversion to the pre-Obama labor-force participation rates would supply more than enough workers to generate a 3% growth rate.

Even baby-boomer retirement is driven in part by public policy. When Social Security paid its first check in 1940 average life expectancy was 64 years and benefits started at 65. Today early retirement is available at 62. Life expectancy is now projected to be 79 years. People are healthier, morbidity rates have fallen dramatically, and the retirement age can and should be raised.

Bad policies—not bad luck or a loss of God’s favor—have driven down labor productivity and the labor supply. We can change those policies. If reversing Mr. Obama’s policies simply eliminated half the gap between the projected 1.8% growth rate and the average growth rates during the Reagan and Clinton recoveries, it would deliver 3% real growth generating nearly $3.5 trillion in new federal revenues over the next 10 years. That’s not as much as the $4.3 trillion in revenues lost by Mr. Obama’s slow growth, but it’s more than Mr. Trump promises to bring back by reversing his predecessor’s policies.

America without 3% growth is not America. Since 1960, the American economy has experienced 30 years with growth of 3% or more. Seventy-nine percent of all jobs created since 1960 were created during those years. The poverty rate fell by 72% and real median household income rose by $20,519. In the 26 years when the economy had less than 3% growth, just 21% of all post-1960 jobs were created, the poverty rate rose by 37% and household income fell by $12,004. With 3% growth, the American dream is achievable and virtually anybody willing to work hard can live it. Let 3% growth die and a lot of what we love most about our country will die with it.

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics.

Jay Davidson

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The largest threat to our prosperity is government spending that far exceeds their authority – Jay Davidson
Every time the Federal Government spends a dollar, on anything, it must first obtain that dollar through one of two methods: take it from the working private citizen through taxation, or print money, which is the same as going further into debt, which debt will be paid by the private citizen, another form of tax.  Even when corporations pay tax, they pass that cost along to the consumer.  Therefore, are you getting value for the vast amount of tax you pay?
Is the Federal government efficient in using your money?  In very few instances, it is probably the most inefficient entity in the nation.  Why then would any rational, thinking citizen allow their elected congressmen to increase federal spending, which means more taxation and more debt flowing to the most inefficient user of your hard earned money?  You, and only you, are paying for your government.
Politicians say that Welfare and Entitlement are the third rail, to touch them (reduce spending on them) is political suicide.  Well, we the people need to make NOT reducing federal spending political suicide by speaking up, supporting, or not, those politicians who are willing to reduce the destructive burden of federal excess.  It starts with federal spending reduction.
Progressives, Socialists and Communists live to increase taxation using the excuse that welfare and entitlements are morally just.  But these same economic morons ignore the fact that their ‘moral” social vision costs money, our money.  They absolutely ignore the rights to private ownership by ever-increasing taxes to pay for their perverted “moral” vision.  It is time to re-balance the scales of justice.
Jay Davidson
We’re All to Blame Walter E. Williams
For the original article link, please go here.
The largest threat to our prosperity is government spending that far exceeds the authority enumerated in Article 1, Section 8 of the U.S. Constitution. Federal spending in 2017 will top $4 trillion. Social Security, at $1 trillion, will take up most of it. Medicare ($582 billion) and Medicaid ($404 billion) are the next-largest expenditures. Other federal social spending includes food stamps, unemployment compensation, child nutrition, child tax credits, supplemental security income and student loans, all of which total roughly $550 billion. Social spending by Congress consumes about two-thirds of the federal budget.

Where do you think Congress gets the resources for such spending? It’s not the tooth fairy or Santa Claus. The only way Congress can give one American a dollar is to use threats, intimidation and coercion to confiscate that dollar from another American. Congress forcibly uses one American to serve the purposes of another American. We might ask ourselves: What standard of morality justifies the forcible use of one American to serve the purposes of another American? By the way, the forcible use of one person to serve the purposes of another is a fairly good working definition of slavery.

Today’s Americans have little appreciation for how their values reflect a contempt for those of our Founding Fathers. You ask, “Williams, what do you mean by such a statement?” In 1794, Congress appropriated $15,000 to help French refugees who had fled from insurrection in Saint-Domingue (now Haiti). James Madison, the “Father of the Constitution,” stood on the floor of the House to object, saying, “I cannot undertake to lay my finger on that article in the federal Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” Most federal spending today is on “objects of benevolence.” Madison also said, “Charity is no part of the legislative duty of the government.”

No doubt some congressmen, academics, hustlers and ignorant people will argue that the general welfare clause of the U.S. Constitution authorizes today’s spending. That is simply unadulterated nonsense. Thomas Jefferson wrote, “Congress (has) not unlimited powers to provide for the general welfare, but (is) restrained to those specifically enumerated.” Madison wrote that “if Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the Government is no longer a limited one possessing enumerated powers, but an indefinite one.” In other words, the general welfare clause authorized Congress to spend money only to carry out the powers and duties specifically enumerated in Article 1, Section 8 and elsewhere in the Constitution, not to meet the infinite needs of the general welfare.

We cannot blame politicians for the spending that places our nation in peril. Politicians are doing precisely what the American people elect them to office to do — namely, use the power of their office to take the rightful property of other Americans and deliver it to them. It would be political suicide for a president or a congressman to argue as Madison did that Congress has no right to expend “on objects of benevolence” the money of its constituents and that “charity is no part of the legislative duty of the government.” It’s unreasonable of us to expect any politician to sabotage his career by living up to his oath of office to uphold and defend our Constitution. That means that if we are to save our nation from the economic and social chaos that awaits us, we the people must have a moral reawakening and eschew what is no less than legalized theft, the taking from one American for the benefit of another.

I know that some people will say, “Williams, I agree with most of what you say, but not when it comes to Social Security. Social Security is my money I had taken out of my pay for retirement.” If you think that, you’ve been duped. The only way you get a Social Security check is for Congress to take the earnings of a worker. Explanation of your duping can be found on my website, in a 2010 article I wrote titled “Washington’s Lies” (