Expect more class warfare

From yesterday’s San Francisco Chronicle:

Soaring unemployment has poured salt into a long-festering economic wound - the widening gap between rich and poor Americans, a trend that has been accompanied by a hollowing out of the middle class.

One unimpeachable view of this wage gap comes from a Federal Reserve report that examined the period leading up to the housing bust and recession, and noted that "income became more 'unequally' distributed over the 1988-2006 period."

A more provocative analysis emerges from research co-written by UC Berkeley economist Emmanuel Saez.

After studying Internal Revenue Service records since 1913, Saez found that the fraction of total income reported by the top 1 percent of tax filers peaked at 23.94 percent in 1928.

Thereafter, income for this elite group fell for decades, only to rise from the 1980s through 2007, when this top strata took in 23.5 percent of all reported income.

Economist Emmanuel Saez, the author of this study, is a left wing progressive that constantly manipulates data to achieve his self serving political views. He’s done this before. Back in 2003, he released the original version of this study (the recently released data reported in the Chronicle is simply an expansion of the original study and not a whole new study) which was lauded by liberal pundits everywhere as hard proof that George W. Bush, the GOP, and capitalism, were wreaking havoc on the middle class. But in a public takedown, Alan Reynolds of the Cato Institute unraveled many of the allegations in Mr. Saez’ study in a well written article for the Wall Street Journal. One of the salient points Reynolds summarizes, and which Saez fails to address in his retort, is that counted in the upper 1% of the Saez study are business profits from S-corporation returns. Needless to say, counting business profits for one group in a study that purports to evaluate the income gap among different groups is going to predictably skew results; this of course, was all conveniently overlooked by Saez and class warfare cheerleaders.

Another important point that Reynolds makes that Saez weakly replied to is the matter of transfer payments: The lower tiers of the income distribution tend to depend more on Social Security checks, disability checks, welfare checks, housing assistance, etc. Since the income data that Saez relied upon does not really take these transfer payments into account as income, the income data for the lower tiers will be much lower; this is simply dismissed by Saez as irrelevant in his response to Reynolds.

Lastly, Saez never acknowledges in his study, or the retort to Reynolds, that many in the lower tiers tend to work fewer hours than the upper echelons (see Income and Wealth by Alan Reynolds, pp.26-27). There are many part-time workers and fewer year-round workers in the bottom 20 percent by income. Saez never takes this obvious reality of those living in the lower distribution into account. Hence, a gnawing income gap appears in the Saez study.

You see these types of studies from time to time all claiming the growing wealth of the upper classes at the expense of the American middle class. I find it curious that these sorts of studies always seem to hit the news cycle right around election time. The original Saez study was released 8-9 months before an election but got much more press as the election date got closer. Now we see the expanded Saez study making the news rounds before mid-terms. Make no bones about it, this newly expanded study will be used as firm and incontrovertible data for left wing politicians to advance their arguments for wealth distribution and higher taxes.

November 2nd can't get here fast enough

With 40 days or so to go till mid-term elections, Intrade prediction markets have Republicans controlling the House of Representatives at an all time high.

Even when you lose, the taxman wins

Let's make some real change

Jeff Perren of Shaving Leviathan writes on the Progressive hold on America and how to break their grip. An excerpt:

..the influence on American culture of progressive ideas goes far beyond and far beneath politics. They represent a full-scale assault on all classical liberal values: reason, objective ethics, natural rights, capitalism, and their products — freedom and industrial production. Cleaning up Washington will be the barest beginning to reversing a century-long slide in America, one that has accelerated in the last four decades.

Ending bailouts, lowering federal spending, and tinkering with Social Security will give everyone some economic breathing room. But these actions won’t right a country that’s been increasingly tilting left for the past 40 years. And without fundamental change even those victories will be too small, and woefully short-lived.

Conservatism is dead?

With less than 50 days to go till mid-term elections, Intrade prediction markets has the Republicans at a high of at least 72.7 on controlling the House.

Oh no! It's the Tea Party!!!

They are just regular Americans, folks. They are not the demons that HuffPo, MSNBC, and the Daily Kos make them out to be.

HT: Beers with Demo

What's it gonna cost us to regulate that industry?

So the latest news that has progressives all excited is that the Obama administration is set to tap Elizabeth Warren to head the Consumer Financial Protection Bureau. Progressives LOVE her. But Warren is another example of the endless cult of personality theme that runs through leftist political thought: If you just install the right person into a leadership position, the smart and caring person that says all the things you like to hear, then all will be fixed just as right as rain. BWAHAHAHA!

I don't care for Warren. Her answer to everything is "let's regulate it," while never discussing what the cost is to wanton regulating. Just because an industry is heavily regulated doesn't mean that it will be more safe, efficient, or less costly: Public Choice economists figured that out long ago.

So, how's TARP doing these days?

Um...not so good for small banks that received taxpayer funds. From The Washington Post:

Big Wall Street firms have the most bruised public reputations, but it's a collection of smaller banks that continues to plague the Treasury Department's bank bailout program.

The latest report from the agency shows that more than 120 institutions - nearly all of them small banks - have missed their scheduled quarterly dividend payments, which is more than a sixth of the banks that received federal aid during the financial crisis.

In addition, five banks that received capital injections from the $700 billion Troubled Assets Relief Program have failed altogether, making it highly unlikely that taxpayers will recover the nearly $3 billion poured into those institutions.

The Treasury report showed that at the end of August, a record six banks each missed six dividend payments...

...The rising number of "deadbeat" banks, as they are known, has prompted calls for Treasury officials to take action to protect taxpayers' investment.

The bailout legislation gives the Treasury the authority to appoint two members to the boards of banks that miss six or more dividend payments, but the agency has refrained from doing so.

Strangely, you don't hear much from the crowd that thought that TARP was a great idea these days. Heck, now we have the Obama administration and Democrats pushing for a TARP-like deal for small banks to lend to small businesses. Anybody want to take a wild guess on how that ends?

Can the news around here get any worse?

So many articles, so much news, so little time; here are the more interesting links from my weekend perusal:

1) According to this HuffPo report, the poverty rate has jumped along with the number of families in shelters. Hmm, it looks like Obamanomics is working to perfection. Soon we will all be much poorer and Democrats will come to the rescue with even more government social engineering and fiscal interventions. Happy days.


2) Randall Hoven over at American Thinker soberly summarizes the extent of debt and future fiscal liability that our country faces.

3) For some weird reason Obama gear is not selling as much as it used to. How strange.

4) Obama has installed another Keynesian hack, Austan Goolsbee, to pull levers and plan great big plans to “fix” our economy--at our expense, of course. God help us. Goolsbee has already started to create a narrative of low expectations by announcing that unemployment will stay high for a long time. Thanks a lot, dude. We have already figured that out by simply taking a gander at your economic policy to see that you are creating a train wreck. Goolsbee said this:

"This recession is the deepest in our lifetimes, the deepest since 1929…more than 8 million people lost their jobs. It's going to take a significant push on our part -- and time -- before that comes down…I don't anticipate it coming down right away."

Mr. Goolsbee, there is no doubt that this past recession was severe but we are no longer in a recession. The economy is in a slow lull caused by the anticipation of higher taxes, regulations, de-leveraging, and federal debt. It is obvious from the above quote that you will “push” for more government planning to solve a problem created by government. Please stop helping before it's too late.

Political arguments couched as economic arguments

"Parasitic human infants."

Can you imagine if this guy had been wearing a Tea Party shirt or had any remote conservative viewpoints? CNN, ABC, NBC, CBS, PBS, and MSNBC would have 24 hour coverage at the scene and endless panels of experts, pundits, and liberal activists denouncing anything and everything to do with conservatism. Blogs like Huffpo would have exploded. IMHO, the Maryland police should be commended for their quick actions.