Like the local leaders in San Francisco, Baltimore officials blamed the retailers for leaving instead of the thieves for driving them away. But indulging criminal behavior in the name of “social justice” only helps criminals, who are not representative of all blacks. Public policies that give priority to the interests of lawbreakers only lead to more lawbreaking, and by extension to more economic inequality. Businesses have every incentive to flee these communities and the jobs follow them.
Tempting though it may be to blame the social dysfunction in poorer communities on heartless business owners or racists cops, the bigger blame surely lies with public policies that condone counterproductive behavior and make successful businesses much more difficult to operate.
Still, credit goes to Maynard for coming up with a thoroughly fitting message for the party in power, as they approach the midterms: Democrats in 2022: Try to Lower Your Expectations!
If Ms. Maynard means it’s “our turn” to accept less economic vitality because Americans made the decision to elect Mr. Biden and enough Democrats to make Mr. Sanders the Senate’s first socialist budget committee chairman, then perhaps she has a point.
But there’s no reason voters should simply accept Washington failures without exercising their First Amendment right to peaceably assemble and petition the government for a redress of grievances. Voters are permitted to have regrets and to try to persuade politicians to avoid huge, obvious mistakes.
On the other hand, if voters really think it’s high time that Washington punished them for wanting plentiful goods and services, various online commenters have suggested a slogan for Democrats running in 2022:
Expect Less.
Peter Suderman calls out “Progressive” Democrats in Congress for their budgetary shenanigans.
J.D. Tuccille reports some good news.
Bryan Caplan writes about newly minted Nobelist David Card.
Additional puzzling evidence comes from data on productivity (how efficiently firms use inputs). Choi and Levchenko show that HCI Drive‐targeted firms experienced a large decrease in productivity, something other research, using the same data, has highlighted. The two pieces of evidence – the apparent HCI policy success in growing sales, and the simultaneous decrease in productivity –could indicate that South Korea’s HCI Drive was a success to the extent it circumvented previous foreign credit restrictions, leading to an increase in sales. But subsidies also led to excessive borrowing, bloated firms, and lower productivity. In this scenario, simply repealing the FCIA would have produced better results.
Veronique de Rugy and Jack Salmon at the Mercatus Center summarized 24 cross‐country studies that looked at government debt and growth, as summarized in the table below. Seventeen of the studies found a threshold above which rising debt is associated with reduced growth.
Government debt above 90 percent of GDP is correlated with slower economic growth, based on the average of 17 studies. That means America’s debt—at 141 percent and rising—is well into the debt damage zone and is likely undermining our prosperity already.
Salmon updated his debt and growth research in the Cato Journal. He found 36 studies that identified a statistically significant negative effect of government debt on growth.
First, any economic activity ostensibly spurred by a subsidy will be offset by reductions in government services, increased debt, or higher taxes that siphon resources from private enterprise. It’s like trying to fill a pool by dipping a bucket in one end and pouring it back in the other. Advocates claim to know which high-impact industries to subsidize, but even if this were true (their track record is poor), they usually fail to account for these tradeoffs.
Subsidies also breed inefficiency. If a local project wouldn’t be built without a subsidy, maybe your community isn’t well-suited for it. With enough money, Mississippi could create an ice fishing industry in artificially frozen lakes. But some things are better left to Minnesota.
The president’s plan would be the largest tax-and-spend increase—and disincentive to work—since the introduction of the income tax. It would tax those who produce and subsidize those who don’t. It would encourage dependency on government and punish self-sufficiency. Wealth taxes could exceed 70%, and marriage penalties on small-business owners could exceed $130,000. Families could be hard-pressed to keep farms and businesses after the original owner dies. And the real median household income would fall by $12,000. Meanwhile, lower-income households would see their generous government assistance decline rapidly in the event of even a modest increase in earned income.
Increasing the implicit tax on working has the same effect as a statutory tax increase on income, investment and wealth: decreased employment. With inflation-adjusted private investment having declined for the first two quarters of this year, the nation doesn’t need direct—or indirect—tax increases, especially on investment.
