Are Democrats Declaring Capitalism Dead?

This is one of those posts that are very hard to write. It is the kind of thing that I would prefer to "rant" about rather than approach with calm, because the situation really is quite upsetting. Things that is so important to our culture, our history, and our affluence is being declared dead by members of the Democratic Party. Free enterprise, limited government, and private property are being treated like old and dead ideas. Democrats see them as concepts that didn't work and should be swept away.

In the early 1990s I traveled several times to Eastern Europe and the former Soviet Union conducting seminars on how to convert their economies to free markets while I was a Fellow with the American Economic Foundation. Today, all of the economies in the countries I addressed with the exception of Belarus have lower tax rates than the United States today. It appears our universities and political leaders need similar seminars in our country.

Governor David Paterson of New York told Fox News today that it is time to begin the public works programs similar to what we had under Franklin Roosevelt. He joins numerous Congressional Democrats making similar proclamations. In a candid encounter with a man on the streets, Presidential candidate Barack Obama said that he believes that "spreading the wealth" is a "good thing."

Historically, the purpose for taxes is to pay for those programs that were designed to be beneficial to all and provided special privileges for none. During the Great Depression, the idea of helping those due to extraordinary circumstances came into practice after early attempts by the Supreme Court to stop such policies, failed (Roosevelt out lived enough members of the Court and appointed those with a similar worldview to take their place and the majority). This was soon followed in the 1960s by a "War on Poverty" that became more like an assault on the poor that led to an increase of economic despair annually until the policies began to be reversed in the 1990s (which has led to a reduction in poverty). We are right back at the point of going back to the government creating a paternal relationship with its citizens. Are we like sheep? You bet!

Irresponsible organizations like ACORN fund individuals that include Sen. Barack Obama, who in turn "organized" his "community" to pressure local banks to back loans that lead to our subprime crisis. As a result of the efforts of people like Obama, the unaccountable banks gave more money to his campaigns than any member in the history of the Senate with the exception of the Banking Committee Chairman, Chris Dodd. Obama leads the effort to undermine the fundamentals of our financial system and he will be rewarded with the highest office in the land. People are "entitled" to home loans we are told, let the standards that keep banks operating healthy be disregarded. Now we are being told to bailout the banks that have taken such a route.

This massive push towards socialism isn't entirely the Democrats fault. In fact, John McCain has done an excellent Democrat impersonation by saying he wants some of the $800 billion to go directly to home builders who are struggling so they can pay off their loans. Let's reward those who bit off more than they can chew, he argues, but there will be no benefit to those who had adjustable rate mortgages and figured out how to maintain their obligations. Talk about moral hazard!

Republicans aren't losing the election today because voters have denounced free enterprise, it is because they can't find a serious candidate that is promoting such. Republicans have done a terrible job of defending economic freedom since Ronald Reagan and voters are lost as to where they can find those who will support economic liberties. I have said for a long time that if Republicans are going to act like Democrats, you might as well vote for the genuine article. Republicans need to get prepared for that probability as we approach the election.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obama, Wealth, Work, and Poverty

We should want a tax code that rewards wealth to create work. Not a tax code that rewards work, instead of wealth. The latter would “succeed” only if the government was the primary source of job creation. That describes societies with command economies, such as what we saw in Eastern Europe and the former Soviet Union before the fall of Communism and in struggling developing countries today that have yet to figure out why their economies haven’t worked. Such hostile views towards wealth creation should not be found in free market economies, such as the United States, but it is exactly what we saw and heard during the Democratic National Convention (DNC).

Its funny, in my circle of friends, decrying the engines that create wealth is the equivalent of economic blasphemy. At the DNC, it was a virtue. The message of “we need a tax policy that rewards work, not wealth” wasn’t merely seen on the signs of delegates or alternates. It wasn’t the occasional mentioning of one of the many speakers that passed in front of the microphone. It came from the keynote address of the Party’s nominee for President. Barack Obama.

This sentiment of wanting to bite the hand that feeds the economy (wealth created by corporations and small businesses, not revenue confiscated by taxpayers) stood in contrast to the message heard by the candidate that I hoped would get the Republican nomination and who spoke at the his party’s Convention on behalf of Sen. John McCain, former Sen. Fred Thompson of Tennessee.

Thompson uses a Southern charm and has a disarming approach to speaking that made the logic of what he said perfectly clear, regardless of party affiliation or philosophy. Paraphrasing the Senator, Thompson pointed out that the Democrats only want to increase the taxes on a small group of people – the top 5 percent. This, we are told, has no effect on the common person. Unless you buy milk, bread, or any other consumer product at the store. Or if you have a job that is dependent on someone (or company) subject to that top five percent. The Democrats like to bemoan “trickle down economics” (where the government ostensibly benefits the wealthy, which in turn creates opportunities for others). But the trickle can be seen in more than one way. The trickle can be policies that hurt the rich and, out of simple self interest, they share the misery with everyone else. Thompson did an excellent job of warning us of that possibility.

According to economist Stephen Moore of the Wall Street Journal, the US already has the second highest corporate tax rates of any developed country in the world after Japan. That, more than cheap wages, has led to the flight of jobs and manufacturing to other countries. Barack Obama promises to push us further in that direction through tax increases.

Ronald Reagan use to say that “you can’t help America’s poor by making America poor.” Obama disagrees. He intends to help America’s poor by making more people poor, so they will have more company. An Obama administration will be very interesting indeed. I doubt, however, we can afford it.

Kevin Price's articles are found daily in national publications such as USA Today, Chicago Sun Times, and Reuters. Subscribe to his newsletter here.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review.