Wise Words From An Economic Professor

Walter E. Williams is a professor of economics at George Mason University. I heard him speak many years ago when one of my daughters received a degree from Northern Virginia Community College. He is a brilliant man. On March 16th, Professor Williams posted an article at the Daily Wire. The article deals with the idea of redistributing wealth.

The article states:

In a free society, people earn income by serving their fellow man. Here’s an example: I mow your lawn, and you pay me $40. Then I go to my grocer and demand two six-packs of beer and 3 pounds of steak. In effect, the grocer says, “Williams, you are asking your fellow man to serve you by giving you beer and steak. What did you do to serve your fellow man?” My response is, “I mowed his lawn.” The grocer says, “Prove it.” That’s when I produce the $40. We can think of the, say, two $20 bills as certificates of performance — proof that I served my fellow man.

A system that requires that one serve his fellow man to have a claim on what he produces is far more moral than a system without such a requirement. For example, Congress can tell me, “Williams, you don’t have to get out in that hot sun to mow a lawn to have a claim on what your fellow man produces. Just vote for me, and through the tax code, I will take some of what your fellow man produces and give it to you.”

The last example shouldn’t even be legal.

The article also comments on the idea of ‘making enough money”:

Let’s look at a few multibillionaires to see whether they have served their fellow man well. Bill Gates, co-founder of Microsoft, with a net worth over $90 billion, is the second-richest person in the world. He didn’t acquire that wealth through violence. Millions of people around the world voluntarily plunked down money to buy Microsoft products. That explains the great wealth of people such as Gates. They discovered what their fellow man wanted and didn’t have, and they found out ways to effectively produce it. Their fellow man voluntarily gave them dollars. If Gates and others had followed President Obama’s advice that “at a certain point” they’d “made enough money” and shut down their companies when they had earned their first billion or two, mankind wouldn’t have most of the technological development we enjoy today.

The article concludes:

Take a look at the website Billionaire Mailing List’s list of current billionaires. On it, you will find people who have made great contributions to society. Way down on the list is Gordon Earle Moore — co-founder of Intel. He has a net worth of $6 billion. In 1968, Moore developed and marketed the integrated circuit, or microchip, which is responsible for thousands of today’s innovations, such as MRIs, advances in satellite technology and your desktop computer. Though Moore has benefited immensely from his development and marketing of the microchip, his benefit pales in comparison with how our nation and the world have benefited in terms of lives improved and saved by the host of technological innovations made possible by the microchip.

The only people who benefit from class warfare are politicians and the elite; they get our money and control our lives. Plus, we just might ask ourselves: Where is a society headed that holds its most productive members up to ridicule and scorn and makes mascots out of its least productive and most parasitic members?

If you want to be a millionaire, find a need and fill it. That is the proven method.

Where We Were And Where We Are

Walter Williams posted an article at Townhall today about welfare.

The following information about Walter Williams is posted on his Facebook page:

Born in Philadelphia in 1936, Walter E. Williams holds a bachelor’s degree in economics from California State University (1965) and a master’s degree (1967) and doctorate (1972) in economics from the University of California at Los Angeles.

In 1980, he joined the faculty of George Mason University in Fairfax, Va., and is currently the John M. Olin Distinguished Professor of Economics. He has also served on the faculties of Los Angeles City College (1967-69), California State University (1967-1971) and Temple University (1973-1980). From 1963 to 1967, he was a group supervisor of juvenile delinquents for the Los Angeles County Probation Department.

More than 150 of his publications have appeared in scholarly journals such as Economic Inquiry, American Economic Review and Social Science Quarterly and popular publications such as Reader’s Digest, The Wall Street Journal and Newsweek. He has made many TV and radio appearances on such programs as Milton Friedman’s “Free to Choose,” William F. Buckley’s “Firing Line,” “Face The Nation,” “Nightline” and “Crossfire.”

Walter Williams is one of the leading economists in America.

These are some highlights from his Townhall article:

Before the massive growth of our welfare state, private charity was the sole option for an individual or family facing insurmountable financial difficulties or other challenges. How do we know that? There is no history of Americans dying on the streets because they could not find food or basic medical assistance. Respecting the biblical commandment to honor thy father and mother, children took care of their elderly or infirm parents. Family members and the local church also helped those who had fallen on hard times.

During the late 19th and early 20th centuries, charities started playing a major role. In 1887, religious leaders founded the Charity Organization Society, which became the first United Way organization. In 1904, Big Brothers Big Sisters of America started helping at-risk youths reach their full potential. In 1913, the American Cancer Society, dedicated to curing and eliminating cancer, was formed. With their millions of dollars, industrial giants such as Andrew Carnegie and John D. Rockefeller created our nation’s first philanthropic organizations.

He further observes:

Before the welfare state, charity embodied both a sense of gratitude on the behalf of the recipient and magnanimity on the behalves of donors. There was a sense of civility by the recipients. They did not feel that they were owed, were entitled to or had a right to the largesse of the donor. Recipients probably felt that if they weren’t civil and didn’t express their gratitude, more assistance wouldn’t be forthcoming. In other words, they were reluctant to bite the hand that helped them. With churches and other private agencies helping, people were much likelier to help themselves and less likely to engage in self-destructive behavior. Part of the message of charitable groups was: “We’ll help you if you help yourself.”

The article concludes:

There is virtually no material poverty in the U.S. Eighty percent of households the Census Bureau labels as poor have air conditioning; nearly three-quarters have a car or truck, and 31 percent have two or more. Two-thirds have cable or satellite TV. Half have at least one computer. Forty-two percent own their homes. What we have in our nation is not material poverty but dependency and poverty of the spirit, with people making unwise choices and leading pathological lives, aided and abetted by the welfare state. Part of this pathological lifestyle is reflected in family structure. According to the 1938 Encyclopaedia of the Social Sciences, that year 11 percent of black children and 3 percent of white children were born to unwed mothers. Today it’s respectively 75 percent and 30 percent.

 There are very little guts in the political arena to address the downside of the welfare state. To do so risks a politician’s being labeled as racist, sexist, uncaring and insensitive. That means today’s dependency is likely to become permanent.

Restoring the work requirement to welfare is a partial answer to the problem. However, the real answer is to restore the family, the moral values we have lost, and the value of parenting.

In March 2013, The Brookings Institute posted an article titled, “Three Simple Rules Poor Teens Should Follow to Join the Middle Class.”

These are the rules:

Let politicians, schoolteachers and administrators, community leaders, ministers and parents drill into children the message that in a free society, they enter adulthood with three major responsibilities: at least finish high school, get a full-time job and wait until age 21 to get married and have children.

Encouraging children to follow these rules is the way we could actually end the welfare state.

 

Why We Need Tax Reform

Yesterday, Walter E. Williams, a professor of economics at George Mason University, posted an article in The Daily Signal. The article explains who pays taxes in the United States.

The article reports:

According to the latest IRS data, the payment of income taxes is as follows.

The top 1 percent of income earners, those having an adjusted annual gross income of $480,930 or higher, pay about 39 percent of federal income taxes. That means about 892,000 Americans are stuck with paying 39 percent of all federal taxes.

The top 10 percent of income earners, those having an adjusted gross income over $138,031, pay about 70.6 percent of federal income taxes.

About 1.7 million Americans, less than 1 percent of our population, pay 70.6 percent of federal income taxes.

The article points out that there are some serious questions about the fairness of this arrangement:

But the fairness question goes further. The bottom 50 percent of income earners, those having an adjusted gross income of $39,275 or less, pay 2.83 percent of federal income taxes.

Thirty-seven million tax filers have no tax obligation at all. The Tax Policy Center estimates that 45.5 percent of households will not pay federal income tax this year.

There’s a severe political problem of so many Americans not having any skin in the game. These Americans become natural constituencies for big-spending politicians. After all, if you don’t pay federal taxes, what do you care about big spending?

So why should the bottom 50 percent of income earners and those who pay no income tax be interested in electing people who will cut taxes and stop runaway spending? If less than 1 percent of the population is carrying the tax burden, they really don’t have any serious political leverage–they are a very small voting bloc.

There is also another aspect to this:

There’s another side to taxes that goes completely unappreciated. According to a 2013 study by the Virginia-based Mercatus Center, Americans spend up to $378 billion annually in tax-related accounting costs, and in 2011, Americans spent more than 6 billion hours complying with the tax code.

Those hours are equivalent to the annual hours of a workforce of 3.4 million, or the number of people employed by four of the largest U.S. companies—Wal-Mart, IBM, McDonald’s, and Target—combined.

Along with tax cuts, tax simplification should be on the agenda.

Our current tax code is a tribute to the successful efforts of lobbyists and special interest groups. That needs to change.