Saturday, November 8, 2008

Economic Freedom Needed in the U.S.

A special California legislative session is beginning to deal with this fiscal year’s budget deficit, as high as $10 billion by some estimates.

California can learn from those states with the most economic freedom, because they perform better on all fronts.
In 2005:
-the 15 freest states grew at a rate more than six percent greater than the 15 states with the least economic freedom;
-per-capita income in the 15 most economically free states grew a full 31-percent faster than in the 15 states with the lowest levels of economic freedom;
-in the states with the most economic freedom, employment growth was a full 216% higher than other states, including California, which ranks a dismal 47th out of 50 states in economic freedom, according to PRI’s U.S. Economic Freedom Index;
-New York still ranks dead last;
-in California two years ago the unemployment rate was 4.6 percent--it is now 7.7 %, predictable in a state that maintains conditions hostile to job growth. Contrast the record of other western states;
-the unemployment rate in Utah is 3.5 percent, less than half of California’s and 'hardly a month goes by without Utah announcing a corporate relocation or a new factory". Condensed from: Pacific Research Institute Vol. 13 No. 45: November 5, 2008 K. Lloyd Billingsley Editorial Director

It causes alarm to think we may have elected a President who may create less economic freedom. Barak Obama inspires hope and good will, and perhaps many good things will come of his Presidency in the social/moral world. Perhaps there will be less racism, both overt, and the sort that is hidden but just as malignant. Perhaps black hopes will cause fathers to return to families they have long abandonded.

Perhaps--many many things. Obama is a breath of fresh air, he is not afraid to demonstrate his education by being the most erudite-sounding President-elect in my lifetime, and his communication skills appear to be greater than Ronald Reagan, "The Great Communicator."

But he is untested in the eyes of national affairs. All we know of him is that he is the most liberal, the Senator furthest to the left in his voting record, perhaps in the history of the Legislature.

As evidence, his website says things such as this: "Barack Obama and Joe Biden will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief." [emphasis added]

There is no ontological definition for windfall profits. When government decides what is an "excessive" profit margin, you can bet the governement will want to do something to "redistribute" all that money. Despite the enormous profits made by Exxon-Mobile, the oil industry makes a smaller percentage in returns for every dollar invested than do the majority of businesses. The same with the auto industry, which if it was doing well, could be targeted as easily as the oil companies. But it was revealed a few days ago that General Motors is burning through $1 billion a month because of lost revenues. What if it was making $1 billion a month because people liked the cars they made? Would that be excessive profits, subject to windfall taxes?

What about Wal-Mart, the most successful and biggest company in the world? Sure, they keep prices low for those Americans who can't afford the expensive department stores. But look at their profits! Whoo-weee! Now there's something Obama could easily tax!

But the point is, everything Obama has said he would do with the economy will only make it less free, less capitalistic, and more taxable, speaking in terms of wealth-spreading. (His words.)

If I understand his ideas of making NAFTA more fair--in other words, removing any incentives government may have previously offered to business who move work out of the U.S.--then I agree whole heartedly. If his idea is to punish businesses who move out, then I disagree.

The fact is, Obama inspires hope for a better world, but from everything he has said and done--so far--we can expect less economic freedom in the U.S. in the coming years, not more.

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