Democratic Party presidential contenders debate, 7/30/19.
The morning after last night’s Democratic Party debate I was reading Jay Nordlinger’s story (National Review, 7/29/19) about the Russian dissident Mikhail Khodorkovsky, now in exile in Britain. It brought to mind an inextinguishable need in the enthusiasts of socialism, whether openly declared or as quiet fellow travelers (much of the Democratic presidential field), to constantly point to a non-existent, never-realized form of it. It’s a phantom only possible in the mind’s eye of the true believer and nowhere else. Bernie exhibits it in great bounty, and so does an increasing portion of the party’s activist base, the party’s stable of presidential candidates, and its giddy zealots in Congress (the dimwit Squad for instance). In addition to Stalin’s Socialist Realism in art, we must add Socialist Longing – the longing for a future and purer socialism that somehow will get it right – to the doctrines of the Church of Socialism.
Bernie sounds like he was mentally put into a cryogenic state during his glory days of the 1970’s and 80’s. Mentally, he’s still honeymooning in the Soviet Union. Khodorkovsky mentioned the everywhere-stated party slogan: “The Party solemnly promises that this generation of the Soviet people will live under Communism.” Bernie is stuck there as well. For Bernie, the promise is always in the future, or in a northern European country that, in reality, shed much of its experiment in socialism. Bernie’s socialism is the Sweden of 1970, for example, not the Sweden of today.
Does he know that Sweden isn’t far behind the US in Heritage’s economic freedom rankings? (The US position was bolstered by the recent tax cut law.) Still, Sweden has no minimum wage law, abolished its inheritance tax in 2004, and let go of much of its state-owned enterprises. It’s vaunted public healthcare system is remarkably decentralized, a far cry from Bernie’s sovietized Medicare for All. Bernie’s idea of socialism is the failed version, and can’t point to a functioning one this side of North Korea and Cuba.
Bernie wants to impose something that Sweden ran from. Does he know it? Don’t know, but the longing continues for a decrepit idea in the hope that it will be magically transformed into a success. Bernie is the chief exponent of a made-in-America cargo cult.
One evening I received a call from one of my students in my community college Physical Geography class. He was disappointed in his grade and begged for a higher one. This was his second time around but couldn’t show much improvement. I told him that I couldn’t in good conscience raise his grade as it would be unfair to the other students. He pleaded, “If I don’t get a higher grade, I won’t graduate and I won’t rise to anything in my life.” My heart sank after hearing this. I proceeded to dispel him of the crazy notion. It may be crazy but it is instilled in the young from pre-school on. How did we get to this place?
Somehow, going to college has become our society’s default path to personal advancement. Call it degree inflation. The relentless drumbeat of “college, college, college” has warped public policy with its plethora of taxpayer subsidized financial aid, degraded entry and instructional standards, and produced new “soft science” degree fields that have little bearing on real learning and improved abilities and does much to produce alienated and disgruntled students with a bent for political activism.
Oberlin College students protest a bakery for alleged racism. Later, the college incurred a $44 million judgment for defaming the owners and an employee.
And it fabricates a raft of “disparate impacts”, that old bugbear of civil rights warriors since the 1960’s. College degrees aren’t distributed evenly among social groups, and some groups have protected status in law and court decisions (the Civil Rights Acts and the Griggs decision). As the college degree becomes a de facto test for employment, the brunt will fall disproportionately upon these groups. A new college-industrial complex has taken shape to provide new barriers to job entry and advancement, whose relevance to work performance is more hypothetical than real. The case is laid out beautifully by Frederick M. Hess and J. Grant Addison in National Affairs, “Busting the College-Industrial Complex” (see here).
I suspect that a social bias is at work in this call of “college for all”. Most people making the push come from social strata who predominate in college admissions. It’s how they did it; it’s how their parents did it; it’s how everyone in their well-to-do neighborhood does it. When they get into positions of influence, it’s their preferred prescription for everyone to reach elevated levels of esteem. For them, anything else is for the hoi polloi.
Pres. Obama with daughter Malia, who attends Harvard, and Pres. and Mrs. Clinton with Chelsea who attended Stanford.
Illogic abounds in the process. On the one hand, they complain about the escalating cost of college; on the other, they push as many people as possible into it. It’s as if college advocates want to suspend the relationship between demand and price. You can’t, and when you try, the disjunction will show in other damaging ways.
To put it bluntly, college isn’t for everybody. Nor should it be. Anyway, the heralded thing is debased beyond recognition. Many of our young would be better served if they looked elsewhere for personal growth.
Substitute Gavin Newsom for Brown. Gavin’s got more hair, and its gelled, but the straitjacket fits just as snugly.
I’ve previously posted about the new federal tax law’s possible effects on California and the rest of the deep blue states. Ditto about California’s astronomical gas prices. More has come to light, so the need for “Part II”.
I. California and Blue State Taxes.
April 15 has come and gone. Many Californios – of which I used to be one, like millions of others scattered throughout the country – and others in deep blue states are cutting checks to the IRS instead of receiving refunds. Curtailing SALT (the federal tax subsidy to high-tax states, the Hillary electorate) and the home mortgage interest deduction (HMID), and a few other tax changes, have wreaked havoc with their expectations. Now, they really know what it means to live in a high-tax state.
Michael Ramirez / Weekly Standard
First, lower refunds across the country are expected since withholding was reduced in each one of your paychecks. Paychecks were bigger as the feds took less. We could go back to the old system of the feds lopping off more from each one of your paychecks and giving a pittance back at the end of the tax year. Let’s face it; withholding is a scam.
Second, the caterwauling from California about getting less from the feds than they send to DC has reached a fever pitch. The only problem: it probably isn’t true. George Skelton in the LA Times raised serious doubts, as does Ann Hollingshead with the Legislative Analyst’s Office and the Tax Foundation (see here).
The old wives’ tale was born of a flawed study with gimmicky assumptions. Among other things, not properly accounted was California’s peculiar demography. The state’s age pyramid is distorted with a mass of the young and proportionally fewer elderly. I suspect that’s probably due to massive foreign immigration over the past 5 decades and the hemorrhaging of retirees to other environs. As a result, the accounting contains less federal Social Security and Medicare payments. How much of this is due to the policies championed by the state’s ruling party? Hmmmm, I wonder.
Also, the military draw down since the end of the Cold War didn’t help. Still, in the end, the accounting gimmicks in the earlier study exaggerated the monies going to DC and undervalued the monies to the state. It’s just more proof of Disraeli’s old line: “There are three kinds of lies: lies, damned lies, and statistics.”
As for the clamps on the HMID, any adverse effects can be traced to California foot-shooting. Real estate is very pricey in the state, and getting pricier. It’s a good bet that much of the state’s middle class have mortgages that greatly exceed the limits in the tax law. Why is that? You need look no further than the Leviathan of taxes and regulations smothering housing in the state. Eco-craziness and taxaholism leaves a hangover. It comes in the form of homeless encampments – the usefulness of human poop maps (SF, but applicable elsewhere) as a result – skyrocketing rents, and a strangulation of supply.
Aiming a cocked-and-loaded gun at your foot is an appropriate metaphor.
II. California’s Gas Prices.
Self-serve gasoline prices at Chevron in Malibu exceed $4 a gallon mark on April 15. (Al Seib / Los Angeles Times)
Once again, foot-shooting reigns supreme regarding the state’s astronomically high gas prices. But the mandarins of the ruling party are looking for scapegoats. A Berkeley prof of Business Administration, Severin Borenstein, gave the goons ammunition by apparently identifying a 24-cent “surcharge”, an amount that he couldn’t account for. The near-socialist ruling party didn’t need much of an excuse to go on a jihad against capitalism. Borenstein gave them one.
Prof. Severin Borenstein, UC Berkeley
Well, Severin, here’s one factor that you didn’t think of: the state has so mangled the market for fuel that supply and demand have nowhere to reach but up. Sorry, Newsom and the other chiefs of the ruling party, you can’t suspend the laws of supply of demand like you tried with immigration law. There’s no such thing as a sanctuary from supply and demand. The Soviets took that route to prosperity, and discovered poverty and social collapse.
The peculiar CARBOB blend, cap-and-trade, greenie taxes, and the constant finagling of CARB (Ca. Air Resources Board) have given the state the least consumer-friendly fuel market in the country. Such markets still have supply and demand. It’s just that they intersect at a place above almost any red state. Call it the lefty “surcharge”.
A beleaguered California resident?
This postscript to previous posts only makes the plight of blue states bleaker. The fact that this is democratically-chosen bleakness doesn’t alter the reality. If you want the clowns, accept what happens when you’re ruled by clowns.
And that includes sending more money to the state, any metroplex in the state, and DC. And add to it the high prices for almost anything, including gas. I guess that you get what you vote for.
A Berkeley economist has got the “woke” doofuses running the California madhouse – aka state capitol – in a tizzy over the state’s high gas prices. The number cruncher gave them an excuse for a pogrom [mass violence against a minority] against the oil industry in the state, shape-shifting blame from themselves to the buccaneers of capitalism. Now that’s quite a trick.
Gasoline prices have jumped nearly 60 cents in the past month in Southern California. The average price of $4.30 for a gallon of self-serve regular in Los Angeles County Thursday is the highest in California. The statewide average is $4.20 a gallon. (ED JOYCE/KPCC)
Below is a map of current gas prices by county. Notice the flaming red of California.
Let me count the ways that the screwballs – not Exxon/Mobil – have shafted the California motorist, starting with cap-and-trade. Back in 2015, people knew that the thing would hike fuel prices 11-13 cents per gallon by its lonesome. The dream was to dent global warming; the reality is to dent residents’ pocketbooks. (see here)
Let’s not forget that the state wacks each gallon of gas with a 41.7 cents/gal. levy – soon to rise to 43.7 cents. Couple that with the 18.4 cents federal tax and a commuter starts right out of the gate with each squeeze of the pump handle over 61 cents in the hole, second highest in the nation.
California seems to be always red on these matters. This map sets the combined gas tax burden in the state at almost 66 cents per gallon as of 2015:
It doesn’t stop there. California demands boutique fuels: unique fuel blends just for the not-so-golden state. In fuel-speak, it’s called CARBOB and according to experts, “CARBOB is even more expensive, and is the main reason why California gasoline prices are typically higher than anywhere else in the country.” (see here)
The result is a stunted and mangled market within the narrow confines of one state. Those kind of markets don’t work very well. You can’t impose some of the highest gas taxes, pursue the fantasy of counteracting China and India with California’s adherence to a cap-and-trade straitjacket, and play footsie with fuel blends and not get jacked at the pump. Get real.
It’s simple economics, or – better yet – it’s simple math. I guess it goes to the difference between knowing economics and math and actually believing in them. Apparently, some people think that they can suspend the rules with no ill-effects.
How about a mandatory blood test for those folks in the clown car called the California State Legislature?
Shriner clowns or the California State Legislature in a parade?
I was listening to Pandora’s “Cool Crooners” station this morning. A thought occurred: What makes Frank Sinatra, Frankie Valli and the Four Seasons, Dean Martin, Nat King Cole, and Tony Bennett, among others, stand head and shoulders above your uncle Fred who just so happens to have a good voice as he works at being a very good CPA? Is their success an accident? Certainly, many factors account for their fame, but in the hustle and bustle of life they congealed into excellence. They had a special talent.
Joseph Schumpeter, Austrian economist
What’s this got to do with economics? A lot. The economist Joseph Schumpeter made it abundantly clear. The economy rides on the backs of a few very talented risk takers, whether it be Henry Ford or Jeff Bezos. The accomplished few weren’t just a collection of lucky mediocrities. At the core, this is a remarkably different story than the one peddled by the Democrats.
To justify their love of the state – the key plank of Progressivism – the Dems have convinced themselves of the bottom-up falsehood. In a nutshell, their favorite suggestion for the economic riddle is to confiscate from the rich, deposit the takings in the government, and then have public employees scatter a portion of the proceeds to the hoi polloi. Leaving aside the absorption of a sizable slice of the booty by a hungry bureaucracy and the political chicanery that is endemic to government, the gimmick remains pure, unadulterated economic nonsense.
It’s as if the Dems will create jobs by punishing job-creators. That’s right, they believe that they can confiscate from the people making thousands of jobs and expect the poorer rungs to more than take up the slack with their limited and desperate consumer spending. The rich guy and gal (or the 38 other genders) can’t help creating jobs, even if they fritter away their gains on yachts, private jets, and California coastal real estate. Talk to the guys and gals building the mansions, making the yachts and fancy jets, or the hirelings who maintain or captain them. How many jobs can we expect from a Section 8 housing recipient?
Section 8 housing recipient
Let’s face it, the donkey party isn’t about economic sense. They’re all about class identity – as well as the other identities on their long scroll – and class victimhood. They’ve got too much Marx rolling around in their heads. In the end, the scheme won’t pencil out. These materialist levelers forget that the economic pie isn’t a static thing. Yes, some peoples’ slice grows bigger than others, but in reality, all slices expand. That’s the beauty of a growing pie. The pie is dynamic, not static.
The Lefty alternative is like what happens when the Chinese bound the feet of young girls. Everything gets mangled. Specifically, it’s a mad scramble to take as much for yourself from the only treasure chest in the room. The government becomes the weapon to wield against your rivals. In the end, you’ll find the chest empty, and more than that. It just got smaller.
Now you end up like North Korea. What rich person – you know, the guy or gal who made all those jobs possible in the first place – will wait around for Bernie Sanders, et al, to confiscate their gains? The Sanders crowd will only be able to do it once. The next year, the successful are gone –- along with the jobs.
The UK called it the “brain drain” of the 50’s, 60’s and 70’s. Many talented Brits escaped their country’s King Kong taxman by fleeing to the US. The Beatles even made a song about it (George Harrison’s “Taxman”). Nancy Pelosi and company want to replicate the Labor Party’s economic reign of terror.
For Trump’s America, the proof is in the pudding. CBO numbers on the post-Republican tax cut economy are out. The tax cuts are a financial winner; unemployment is at historic lows (for all of the Democrats’ favorite identities); GDP is growing faster than Paul Krugman’s reputation is declining; wages are rising; and corporate profits are bountiful enough to demand more workers – i.e., more jobs and higher pay – and pay more lucrative dividends. Either way, it all adds up to an economic renaissance.
It’s the same playbook of the 1946/1948 Republican Congresses, JFK, and Reagan. The only response of the Democrats is the caterwauling about the filthy rich, with their emphasis on “filthy”. They deserve to be relegated to the place that used to be reserved for the psychotics, but, today, congregate in the tent cities of the Dems’ strongholds in the LA-to-Seattle corridor.
