Obama Believes in Trickle-Down?

September 7, 2010

I know the Obama Administration is scrambling to do something about lackluster employment and growth figures to lessen gigantic Democratic losses in the mid-term election.  But I am completely puzzled about why their latest stimulus proposal involves granting large corporations tax breaks for new capital investment.  Does the Democratic Party now believe that the best way to stimulate the economy is to give big corporations tax breaks in the hopes that this will trickle-down to help the middle and lower classes?

I know that this is a targeted tax break, but they way in which it is targeted makes it all the less likely to spur job growth.  Most job growth comes come from small businesses.  Small businesses tend not to be capital intensive, so a tax break for capital investments should make little difference for them.  In addition, most of our economy is in the service sector, which also has relatively little capital investment.  A tax break for new capital investment shouldn’t make much of a difference there either.

The main beneficiary of a capital investment tax break would be large corporations in the manufacturing sector.  That’s a relatively small and shrinking sector of our economy, regardless of tax policy.  And fueling capital investment in the manufacturing sector may well reduce the number of jobs — rather than create more jobs — since the trend in that sector has been to substitute capital for labor.  As companies build new and improved manufacturing facilities they tend to need fewer people to operate those machines and build things.

If the Obama Administration thinks tax breaks lead to trickle-down benefits, how about if they focus on reducing capital gains and dividend taxes, which would broadly encourage investment in the service and manufacturing sectors?  This would also benefit small as well as large businesses and would reward the investment in people as much as machines.  Instead the Obama Administration seems determined to raise capital gains and dividend taxes.  Things that make you go hmmmm.

The Obama Administration to Date

October 4, 2009

This just about sums it up — that is zero-sums it up.

Mostly Harmless

September 8, 2009

Many electrons have already been spilled on Obama’s speech today to the nation’s school children.  When news first broke of the planned speech, alarms were raised by Michelle Malkin, Glenn Beck, and Neal McCluskey (among many others). 

This was followed by a counter-backlash from the left as well as folks on the right, including the Wall Street Journal and Tunku Varadarajan at Forbes, who said that the initial reaction was “overwrought” and “demented” (respectively if not respectfully).

The counter-backlash is correct that the speech is basically harmless.  Telling kids to stay in school, say no to drugs, and the like is the sort of thing that Nancy Reagan used to say (and people used to mock not because it was indoctrinating but because it was likely ineffective.)

It’s worth stepping back from this kerfuffle to wonder why the president making a speech to the nation’s school children while they are in school is such a big deal.  The counter-backlash wants to suggest that the original backlash against the speech was motivated by crazy, conspiratorial thinking.  Presidents talk to the country all the time, they note.  And if the problem is supposed to be in the lesson plan proposed by the U.S. Department of Education, teachers can use or ignore these suggestions as they wish, just like they can regularly choose lesson plans.

But that is at the heart of the backlash and is not entirely crazy.  Parents sense a lack of control over what their children are taught in school.  This is as true of every day’s social studies lesson as it is of Obama’s speech.  Most of those lessons, just like the president’s speech, are likely to be unobjectionable to most parents. 

But on a fairly regular basis schools teach (or fail to teach) some things that are contrary to the values that parents would like conveyed to their children.  To those of us who see education as an extension of child-rearing, compulsory education privileging government-operated schools is an intrusion of the government on this parental responsibility.  To others, the intervention of the government is a positive good, protecting children from potentially dangerous values of the their parents and assuring allegiance to a common set of ideals necessary for our society to function.  As an empirical matter, government-operated schools are actually less effective at conveying that common set of ideas than are schools selected by parents.  

Amy Gutmann, in the widely read book, Democratic Education, argues that this is not really an empirical question.  The principle is that there should be some democratic input into what is taught to children, not just parental control.   But in a chapter in the book, Learning from School Choice, I dissect Gutmann’s book to show that her scheme isn’t democratic at all.  She believes that local democracies should control schools as long as they avoid discriminating and repressing.  The problem is that almost everything of importance that they do could be portrayed as discriminating or repressing.  So who, under her scheme, resolves these disputes about what is permissible for local democracies to control in schools?  Unelected judges and unelected teaching professionals.  Gutmann’s proposal is really to substitute the dictatorship of an elite for the dictatorship of parents.  As I’ve argued before, I prefer to trust even poorly educated parents to make decisions in the best interests of their own children than well-trained but differently motivated bureaucrats.

So, beneath the over-reactions and counter-over-reactions on Obama’s speech today is a real issue — Who should have primary responsibility for raising (educating) children?

Walmart Shareholder Meeting 2009

June 5, 2009

I just returned from another excellent Walmart shareholder meeting.  Ben Stiller was the mc.  Michael Jordan gave some inspirational words.  Miley Cyrus, Kris Allen,  and Smokey Robinson performed.  And earlier in the week I saw Sugarland, Brad Paisley, Foreigner, and Daughtry perform at free events leading up to the meeting.  It’s been another great week of entertainment in Fayetteville, Arkansas.

And of course, the meeting discussed Walmart’s business, including its financial results and values as an organization.  On that topic I’ll just repeat what I wrote after last year’s meeting: “They presented impressive evidence and compelling anecdotes of how Walmart saves money for families of modest means and, in doing so, improves people’s lives….  It struck me that if Walmart were a government program, designed to provide basic goods to low-income families at reduced prices, it would be lauded as a great success on the order of the New Deal or the Marshall Plan.  Books would be written about how it worked so well.  Conferences would be organized to sing its praises.  But because someone is actually making a profit while serving low-income families, somehow the whole thing is ruined.  It’s as if social progress can only be made if taxpayers lose money.”  If you want to see more along these lines, check this out.

At this year’s meeting my puzzlement about why people vilify Walmart only continues to grow.  This made me think about how the enemies one chooses says a lot about who one is.  Why do some people choose to focus their energies attacking Walmart while ignoring or even embracing others who more clearly violate their principles?

Let’s take as an example President Obama.  He has clearly chosen Walmart as an enemy.  Obama declared that he “won’t shop” at Walmart.  And during the campaign he participated in a conference call organized by the anti-Walmart advocates, WakeUpWalMart.  According to USA Today Obama said: “‘I think the battle to engage Wal-Mart and force them to examine their own corporate values and what their policies and approaches are to their workers and how they are going to be good corporate citizens, I think, is absolutely vital,’ Obama said, adding he was proud of WakeUpWalMart’s work.”

So how does Obama feel about Iran, whose values and policies must be much more objectionable to Obama than Walmart’s?  In his speech yesterday Obama said about Iran: “There will be many issues to discuss between our two countries, and we are willing to move forward without preconditions on the basis of mutual respect.”  And earlier in the week Obama said: “what I do believe is that Iran has legitimate energy concerns, legitimate aspirations.”  During the campaign, Obama stressed that he would “be willing as president to meet with the Iranian leader.”

Let’s see if I have this right.  Obama wouldn’t go to a Walmart and thinks the “battle” against Walmart is “vital.”  But he’s willing to meet with holocaust-denying Iranian leader,  Ahmadinejad, without preconditions on the basis of mutual respect keeping in mind their legitimate aspirations.

I fully believe that Obama strenuously opposes Iran’s illiberal policies.  The problem is not that he is ignorant of how Iran more clearly threatens his own principles than does Walmart.  The problem is that he approaches Walmart like an enemy while approaching Iran like a friend. 

Who you choose as an enemy says a lot about your own values and priorities.

(edited to add Kris Allen)

Another Quiet Friday

April 25, 2009

What gives?  A second Friday has passed without another sneaky political trick to rob low-income minority students of educational opportunities while attempting to attract as little media attention as possible.  It’s almost like Obama and Duncan have stopped trying — like they are just phoning it in.

Or are they deterred by all of the media attention they did get?

Obama Compares AIG to Suicide Bombers

March 20, 2009


Photo from the LA Times

(Guest post by Greg Forster)

A while back, a certain secretary of education compared the teachers’ unions to terrorists and got in super-major hot water. Remember?

I just wanted to put that on the table so everybody bears in mind the standard for civil discourse that was established during that episode. Of course that standard would apply equally to both parties, right?

The LA Times is reporting that at a California town hall meeting, President Obama compared AIG to a suicide bomber:

Well, OK, that all made sense, but then he compared AIG to a suicide bomber, and at that, we really perked up.

“Same thing with AIG,” Obama said. “It was the right thing to do to step in. Like they’ve got a bomb strapped to them and they’ve got their hand on the trigger, you don’t want them to blow up, but you’ve got to ease them off the trigger.”

And the president held out his arm and pantomimed a hand on a trigger, and we were rapt, waiting for what would happen next.

But then he called for a final question from the crowd.

HT Campaign Spot.

When he’s off the teleprompter, he’s really off the teleprompter.

Steyn is telling Hugh Hewitt that now he’s recycling all the jokes Frank Sinatra used to do about Bob Hope’s reliance on cue cards as Obama teleprompter jokes, and they’re going over really well.

Pay No Attention To My Legislative Agenda

March 11, 2009

President Obama gave a great speech yesterday in which he strongly endorsed charter schools and merit pay.  He also emphasized the need to remove ineffective teachers from classrooms and to expand access to pre-school.

The problem is that these words bear almost no resemblance to the education priorities contained in Obama’s legislative agenda.  This is really strange.  I’m accustomed to presidents exaggerating the attractiveness of their proposed policies.  But Obama is the first president that I can think of who pushes the attractiveness of policies that he is hardly pursuing in legislation while concealing the bulk of his actual efforts.

I’ve previously written about how the bulk of Obama’s increased education spending goes to status quo programs, such as Title I, special ed, Pell Grants, school construction, and generally holding localities harmless against losses in tax revenue.  Almost no money has been devoted to charter schools, merit pay, efforts to remove ineffective teachers, and even pre-school (which received only $4 billion of the $800 billion stimulus package, and most of that was for propping up status quo Head Start programs).  All of the great (and not so great) education policies that Obama talks about are almost completely absent in legislation that he has backed.  And he hardly says a peep about all of the education policies that he does throw money at. 

Obama just distracts us from his actual efforts with pretty words about things that he is hardly doing.  Of course, the most obvious thing he was distracting us from with his speech yesterday was the Senate vote to begin the execution of the DC voucher program.  He didn’t say a word about yesterday’s actions, knowing that all of the headlines would be about the reforms he did endorse (but has done almost nothing to actually enact).

Obama Wins Arkansas!

October 31, 2008

… at least in the mock election held in many Arkansas schools.  According to the Northwest Arkansas Times, “Statewide, Obama won the mock election for Arkansas with 49, 088 votes, compared to 34, 393 for McCain.”  Does this mean anything for Tuesday’s outcome in the state?  I doubt it.  McCain holds a double-digit lead in multiple polls in the state.  But who knows?

McCain and Obama Agree: Competition Good for Education

October 16, 2008

Education finally came up in a presidential debate and I heard something that I never heard before — the standard-bearers for both parties agreed that competition was good for public schools.  Sure, past Democratic candidates have endorsed school choice with charters, as Obama did.  But Obama did something new.  He specifically said that competition from charter schools was important for improving traditional public schools. 

Clinton, Gore, and Kerry embraced school choice with charters as an escape hatch for students condemned to failing public schools, sounding very much like Sol Stern, Mike Petrilli, and Rick Hess.  But Obama left previous Democratic candidates and these fellows at market-oriented (?!) think tanks in the dust by saying that choice was desirable because of competition. 

Here are Obama’s exact words: “Charter schools, I doubled the number of charter schools in Illinois despite some reservations from teachers unions. I think it’s important to foster competition inside the public schools.”

Of course, Obama wants to limit choice and competition to public schools (which include charters), while McCain wants to include private schools in the mix.  But they agree on the big idea:  public schools are improved when they have to compete to earn students and the revenue those students generate.

Just think.  Only twenty years ago school choice and competition was hardly a glimmer in Ronald Reagan’s eye.  Now the idea is so widely accepted as reasonable that the leaders of both parties differ only on the mechanism for producing choice and competition.  We’ve come a long way, baby.

Correction — Rick Hess emailed to say that he did not want to be counted among those who are unpersuaded by competitive effects from choice.  He does think that almost no current choice program is designed properly to produce competitive effects, but he thinks such effects are possible and desirable.

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