Hell Hath No Fury Like A Liberal Scorned By Reaganomics

Reaganomics didn't cause this recession, and Obamanomics won't end it

The long-memoried elephant may be the Republican symbol, but it's the liberals who can't let go. A deep, resentful hatred for Reaganism, and the man who fathered that wonderful doctrine, has simmered just below the surface in the jealous hearts of liberal politicians, bullhorn wielding community activists, and their fellow travelers in the press and in academe. They're now all atwitter at President Obama's multi-trillion dollar ultra-liberal thumb in Reagan's eye.

We're in a recession. They happen every 10 years or so; it's called the business cycle. This one is particularly nasty due to the toxic combination of stupidity and greed rolling simultaneously through the public, private and government government sectors. The free market didn't fail. It performed just as Adam Smith would expect when rapacious predators become untethered from all ethics and morals while willfully-ignorant, doe-eyed naifs abandon prudence and common sense.

Entropy prevails at every turn of this mortal coil, but only in this one case do the screamers on the left insist we abandon a successful model.

Follow the left's logic (if you can)

The war on poverty was started in the 30's, we've spent trillions just since the 60's, but we still have poverty. So why not stop throwing money down that rat hole? Giving money to the poor doesn't make them rich, so let's stop it.

Our schools churn out successively less-educated generations of students, so why not dismantle the public school system?

Car wrecks take thousands of lives every year. Why not tear up the roads and destroy the automobile?

Nobel Laureate Economist Paul Krugman leads the charge, but footsoldiers like the NY Times and LA Times are the real happy warriors, goose stepping to Obama & Pelosi's Solidarity March. Ding dong! Reaganism is dead! They scream, never pausing to contemplate the unprecedented economic gains and job growth we've enjoyed since the dismal Carter years.

All of the Anti-Reagan arguments hinge on the nebulous issue of "fairness." The rich got richer, the poor got poorer...

Brad Schiller wrote an article entitled, The Inequality Myth, in the WSJ last year. It it, he uses census data to shred the liberal argument that inequality has increased since 1980.

While there is some substance to these fears of widening inequality and middle-class stagnation, the situation is not nearly as clear-cut. Demographic changes in the size and composition of U.S. households have distorted the statistics in important ways.

First, we can easily dismiss the notion that the poor are getting poorer. Allowing for population growth shows that the average income of people at the bottom of the income distribution has risen 36% (Since 1970).

Note that rate matches the median income growth for the same period. "They're not rich," he concluded, "but they're certainly not poorer." Another important point is that the "poor" is not a static group. More so than in any other country, American poverty is a temporary state for the vast majority of people who find themselves there.

The supposed decline of the poor and middle class is exaggerated even more by the dynamics of population growth. When people look at the "poor" in any two years, they think they're looking at the same people. That's rarely true, especially over longer periods of time.

Since 1998, the U.S. population has increased by over 20 million. Nearly half of that growth has come from immigration, legal and illegal. Overwhelmingly, these immigrants enter at the lowest rungs on the income ladder. Statistically, this immigrant surge not only reduces the income of the "average" household, but also changes the occupants of the lowest income classes.

He also points out the effects of a shrinking median household size:

... the average household size has shrunk to 2.57 persons from 3.14 -- a drop of 18%. The meaning? Even a "stagnant" average household income implies a higher standard of living for the average household member.

Last year, the Census Bureau published a new set of income statistics that adjusted for changing household size and composition. In a single year (2006), this "equivalence-adjusted" computation increased the income share of the poor by 8% and reduced the standard measure of inequality (Gini coefficient) by 4%. Such "equivalency" adjustments would mute unadjusted inequality trends even more.

Some people would have you believe that all of this added income was funneled to the rich. But the math doesn't work out.

The increase in nominal GDP since 2000 amounts to over $4 trillion annually. If you assume that all that money went to the wealthiest 10% of U.S. households, that bonanza would come to a whopping $350,000 per household. Yet according to the Census Bureau, the top 10% of households has an average income of $200,000 or so.

The implied bonanza is so absurd that the notion that only the rich have gained from the economic growth can be dismissed out of hand. Clearly, there is a lot of economic advancement across a broad swath of population. Dramatic changes in household composition, household size and immigration tend to obscure this reality.

And that's what it's really all about: Eat the rich, as multi-millionaire Aerosmith leader Steven Tyler sings. The poor haven't gotten poorer, but the rich have gotten conspicuously and gallingly richer. The President may be winding down the Iraq way, but he's stoking good old fashioned class warfare.

Hell hath no fury like a liberal scorned. This crisis presented know-it-all social engineers a golden opportunity to roll back Reagan's free market capitalism, and they've grabbed it with both hands, shamelessly exploiting public uncertainty, unhindered by facts or history. You can stand there and let it happen or you can arm yourself with facts to turn back this ignorant onslaught.

http://www.nytimes.com/2008/01/21/opinion/21krugman.html
http://www.nytimes.com/2009/02/27/business/economy/27policy.html?_r=2&hp
http://www.latimes.com/news/nationworld/nation/la-na-obama-budget-assess27-2009feb27,0,5874116.story
http://online.wsj.com/public/article_print/SB120511125873823431.html
http://www.cato-at-liberty.org/2008/01/24/there-krugman-goes-again/