Thanksgiving Offers Lessons on Capitalism

As we prepare to celebrate Thanksgiving tomorrow, it is time again to revisit a key lesson we can take away from the origins of this holiday tradition.

This Foundation for Economic Education article is well worth the read if you are not familiar with why capitalism and property rights play such a vital role in the survival of the pilgrims.

In the first few years, the settlers established a system devoted to the “common good,” a notion still so strongly advocated for today by liberals and statists. Individual ownership of land was not recognized, and indeed the pilgrims set up a system free and clear of the evil profit motive and greedy capitalists. Sounds like the progressive utopia.  The results?

“For this community (so far as it was) was found to breed much confusion and discontent, and retard much employment that would have been to their benefit and comfort. For the young men that were most able and fit for labor and service did repine that they should spend their time and strength to work for other men’s wives and children, with out any recompense.

One half of the crew of the Mayflower, including “many of their officers and lustiest men, as the boatson, gunner, three quartermasters, the cook, and others,” also perished before the little vessel set sail on her return voyage to England in April 1621.

By putting “people before profits,” the pilgrims suffered extreme levels of famine and death.

After a few years of suffering, the pilgrims decided to try a different form of economic organization.

“So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length, after much debate of things, the Gov. (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular [private use], and in that regard trust to themselves”

In short, they made greedy capitalists out of the pilgrims. The result?

This had very good success; for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Gov. or any other could use, and saved him a great deal of trouble, and gave far better content.

“By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many, for which they blessed God. And the effect of their particular [private] planting was well seen, for all had, one way and other, pretty well to bring the year about, and some of the abler sort and more industrious had to spare, and sell to others, so as any general want or famine has not been among them since to this day.”

The lessons to be learned from this are timeless, and we should give thanks that we at least still have remnants of a capitalist system based on private property and voluntary exchange. But we need to be ever vigilant in defending (what’s left of) our economic liberty and fighting to reclaim liberty lost.

The Washington Monument Strategy or Reality?

Have you heard of the Washington Monument Strategy?  Erskine Bowles may have used it when he said recently that the UNC System may be forced to consider closing a campus if the General Assembly goes forward with large budget cuts.  Or perhaps Bowles was simply being forthright with the public.

The Washington Monument Strategy is simple: when budget cuts are on the way, bureaucrats and interest groups decry the cuts and whip up anger by saying that some popular program will be eliminated.  The name is derived from the National Park Service threatening to close the Washington Monument, obviously a popular tourist destination, if their budget was cut.

Of course, given the possible size of the budget cut facing the UNC System, Bowles is right to say that closing down a campus should be considered.  The alternative is to cut funding for each university in the system – cuts that might compromise the quality of education at universities that rely heavily on state appropriations.

Bowles may also have floated a political “trial balloon” to gauge public reaction to a campus closure for future reference.  As a current UNC System student, I have been surprised that the mention of a closure has not been a more toxic issue on campus and in the public at large.

A more in depth discussion of the issue can be read here.

2010 Absentee Vote Turnout (as of 10/28/10)

Early Vote Highlights.

Visit Civitas Vote Tracker for more information on early voting turnout.

Data is downloaded from the State Board of Elections website.

voter_party_code Votes Change from previous
Total 734454 101014
DEM 335989 48848
REP 273215 35274
UNA 124578 16806
LIB 672 86

 

county_desc #voters change from previous
WAKE 58521 none
MECKLENBURG 54495 none
GUILFORD 36090 none
BUNCOMBE 26063 none
FORSYTH 21889 none
NEW HANOVER 18696 up 1
BRUNSWICK 18610 down 1
DURHAM 18149 up 1
CUMBERLAND 17998 down 1
HENDERSON 15282 none
race #voters
NOT ENTERED 2494
AMERICAN INDIAN or ALASKA NATIVE 2364
ASIAN 2162
BLACK or AFRICAN AMERICAN 142113
OTHER 5093
TWO or MORE RACES 1339
UNDESIGNATED 5317
WHITE 573572
446 more 110 year olds voted yesterday the total for that age group is now at 2660 and is included in the >75 group category
age #voters
<26 24390
26-35 38456
36-45 74553
46-55 132158
56-65 197690
66-75 165635
>75 101574

110 Year Olds Vote Strong in NC

So far in early voting 110 year olds have  made a pretty good showing; 2214 of them have voted either by mail or at a one-stop site (214 by mail and 2,000 at early voting sites).  There are 1,420 Democrats in this group, 717 Republicans and 77 Unaffiliated voters.

Nothing against very old voters, but it is funny that these 110 year olds live in only 34 counties and 87% of them live in 4 counties –  Guilford has voted 681 of them so far, Forsyth – 581, Cumberland – 427 and Davidson voted 230.

Some more facts about these older voters:  1,923 of this year’s group also voted in the 2008 General Election during early voting – they were only 108 back then.  In 2008 a total 9,688 108 year olds voted early.

And just in case you thought 110 was pretty old, Gaston County data shows that  a 154 year old voter has cast a ballot and Granville County’s data reflects a voter who is 160 years old.

Absentee data is available for download from the State Board of Elections website.

Tom Ross Revealed: An Agent of Far-Left Change

“We want to be a change agent in the state,” Tom Ross told Todd Cohen in an interview for the Business Journal of Charlotte back in 2002.

And so he was.

Flying in the face of all the noise and cries of “besmirching” one of North Carolina’s great leaders coming from NC Policywatch’s Rob Schofield, Civitas recently discovered an article detailing the fundamental changes enacted by the Z. Smith Reynolds Foundation under Ross’s tenure.

Cohen’s article describes “sweeping changes in grantmaking” of Z. Smith Reynolds, an ideological shift in North Carolina’s largest philanthropic organization that relegated its traditional grant recipients (historical preservation, health care, construction and capital campaigns, etc.) in favor of more “progressive” organizations. These new beneficiaries would hail from the realms of “social, economic, and environmental justice.”

With the then newly selected Tom Ross at the helm, Z. Smith Reynolds took a sharp left turn and became actively engaged in the practice of “backing progressive public policy.” Now he is to be the next UNC System President.

John Hood of the John Locke Foundation summarized the implications of this shift to left-wing activism saying the Z. Smith Reynolds “is going to give less money to charities providing direct services to the public and more money to public policy charities of the left-wing variety.”

Hood added, “I suspect that the previous generations of the Reynolds family who engaged so successfully in our capitalist system would be horrified to find how much their money will be used to subvert that very system.”

So much for being a “mainstream group, funding mainstream causes,” as Mr. Schofield described Z. Smith Reynolds under Ross’s administration. Ross played a lead role in diverting the focus of Z. Smith Reynolds from a well respected philanthropy foundation to a sweetheart of liberal activist groups of all flavors.

Update: Changes to UNC Health Care

UNC students can now opt out of health care coverage for abortions, an option not possible less than a week ago. After numerous pro-life students and activists spoke out, the UNC system is changing the details of the new coverage plan. Fellow Civitas blogger Jason Sutton covered the divisive issue earlier this week responding to the plan’s information going public.

The N&O reported:

Starting in fall 2010…a new health insurance policy kicks in , mandating that all students at UNC system campuses, about 215,000 people, have health insurance. Students must either prove they have their own, or buy insurance through a new plan designed to leverage the system’s buying power to offer reasonable premiums and better coverage than most campuses do now on their own.

Students for Life of America quickly pointed out that the mandatory plan covered elective abortions, something not agreeable to pro-life students. In response to the nationally publicized issue, the UNC system announced this afternoon that it will allow students to opt out of elective abortion coverage. However, the system has yet to comment on whether students who opt out of abortion coverage will pay less for their total health care plan.

While this may be a relative gain for pro-lifers, what I want to know is why a public university system is mandating that students purchase health care from their pre-approved provider? Aren’t most college students over the age of 18 and therefore, adults? Sounds like Obamacare has a test case in the UNC System.

ABC Privatization Debate Forthcoming?

Per a News & Observer report, the chairman of the North Carolina Alcohol Beverage Control Commission (ABC) Jon Williams expects a debate on whether to privatize liquor sales in our state.  The Commission continues to assess what the system is worth.

Recently, ethics issues within the state’s archaic liquor distribution system have arisen in GreensboroNew Hanover County and in Mecklenburg County.  Furthermore, a Program Evaluation Division Report, which can be found here, outlines a list of problems facing the ABC System which could be solved through privatization.  Recently, I wrote about Virginia Governor Bob McDonnell’s (R) desire to privatize the liquor system in his state.

It is good to hear that a debate on privatization of the archaic system is forthcoming.  According to a February 2010 Civitas poll, the people favor privatization by a 47%-37% margin.

Hit By Lightning, Attacked By Bear, Legislation Pending

Well, not exactly, but you have to wonder if the legislature might be eager to help this “victim” of lightning and mauling.  The legislature went full till after video poker, errr, sweepstakes machines because the machines literally attack poor people in the streets and in their homes.  Without stopping to solve the budget woes, they went forcefully after the machines led by the Sen. Josh Stein (D-Wake and former head of Self Help whose brother ran the Center For Responsible Lending which helped usher in the mortgage meltdown.)

So, I guess Stein and Co. might just have to pass some legislation against lightning or bears in some way.  I mean, this fella’ was just a victim and Stein should be concerned.  The difference is that you can really avoid sweepstakes machines, but Stein and the rest of the senate doesn’t think your smart enough to do so on your own.

“They represent gambling on a massive commercialized scale,” said Sen. Josh Stein

Hmm. . doesn’t he support the NC Educational Lottery?  Oh and Harrah’s Casino in Cherokee?  I think it is you Sen. Stein who also represents gambling on a massive commercialized scale with taxpayer dollars.

The Myth of Consumer Spending

In virtually every news report about the economy, we hear reports on consumer spending – whether it be up or down. Consumer spending constitutes 70 percent of the economy, we are told, and therefore a boost in such spending is needed to spur economic growth. Liberal politicians also spout these lines when advocating for Keynesian spending schemes designed to “boost aggregate demand” and get the economy moving again.

Like most economic news reporting and Keynesian dogma, however, this concept is completely backwards.

As economist Mark Skousen discusses in this excellent article, consumer spending is indeed not the driver of the economy.

The truth is that consumer spending does not account for 70 percent of economic activity and is not the mainstay of the U. S. economy. Investment is! Business spending on capital goods, new technology, entrepreneurship, and productivity are more significant than consumer spending in sustaining the economy and a higher standard of living. In the business cycle, production and investment lead the economy into and out a recession; retail demand is the most stable component of economic activity.

Granted, personal consumption expenditures represent 70 percent of gross domestic product, but journalists should know from Econ 101 that GDP only measures the value of final output. It deliberately leaves out a big chunk of the economy — intermediate production or goods-in-process at the commodity, manufacturing, and wholesale stages — to avoid double counting. I calculated total spending (sales or receipts) in the economy at all stages to be more than double GDP (using gross business receipts compiled annually by the IRS). By this measure — which I have dubbed gross domestic expenditures, or GDE — consumption represents only about 30 percent of the economy, while business investment (including intermediate output) represents over 50 percent.

Thus the truth is just the opposite: Consumer spending is the effect, not the cause, of a productive healthy economy.

Skousen also reveals that it is in fact a higher savings rate that is associated with greater economic growth, because savings is what makes investment spending possible and a higher savings rate translates into lower interest rates. Lower interest rates makes it more affordable for entrepreneurs to invest.

Now contrast this revelation with government policies that discourage savings, such as capital gains taxes and inflationary “stimulus” spending that erodes the value of people’s savings.

Skousen’s article articulates economic lessons sorely needed by journalists, politicians, and big-government advocates alike. Read the whole thing.

US Justice Department Meddles in Kinston Elections

Two years ago, the city of Kinston, North Carolina passed legislation via referendum making municipal races non-partisan.  The US Justice Department does not agree with the voters in Kinston that non-partisan elections are a good idea and overturned the results.

In the city, where the population is 2/3 black, the referendum passed with nearly 2/3 of voters voting in favor.  Black voters made up less than half of those voting in three out of the last four elections in Kinston and it is the implied position of the Justice Department that these voter turnout numbers invalidate the election because it is not representative of the population of the municipality.  Principally, the Justice Department argues that because blacks rely on a number of straight Democratic white voters to elect preferred candidates that non-partisan elections will ensure that black candidates do not win.

The position of the US Justice Department is preposterous.  In a free, fair and certified election two years ago, the voters of Kinston decided by a large margin to use the non-partisan election method for the city.  The Justice Department overturned the decision, essentially, because it argues that without partisan elections, blacks will not be able to rely on white Democrats to vote for black candidates and, as a result, those black candidates will not win.

First, the assumption here is that blacks only run as Democrats and that they only vote Democratic.  Another assumption is that voters select their officials on the basis party identification and race and do not take into account the other personal characteristics of the candidates such as integrity and stances on salient issues.  Furthermore, the implicit assumption is that blacks do not vote proportionally to their percentage of the population because of some reason other than the individual decisions of blacks whether to vote.  Perhaps the Justice Department assumes that the people of Kinston are not smart enough to select the best candidate without the aid of party labels; essentially that voters are stupid.

The US Justice Department derived its authority to invalidate the election from the 1965 Voting Rights Act.  The spirit of the legislation is the ensure that no individuals are systematically disenfranchised of their right to vote.  If voters were systematically disenfranchised in Kinston, where is the evidence for these violations?  It appears that the Justice Department has decided that it is necessary to use the legislation to save the voters of Kinston from themselves by overturning the results of a free, fair and certified election.