The True Meaning of Thanksgiving: The Birth of Private Enterprise in America by Richard M. Ebeling

This time of the year, whether in good economic times or bad, is when Americans gather with their families and friends and enjoy a Thanksgiving meal together. It marks a remembrance of those early Pilgrim Fathers who crossed the uncharted ocean from Europe to make a new start in Plymouth, Massachusetts. What is less appreciated is that Thanksgiving also is a celebration of the birth of free enterprise in America.

The English Puritans, who left Great Britain and sailed across the Atlantic on the Mayflower in 1620, were not only escaping from religious persecution in their homeland. They also wanted to turn their back on what they viewed as the materialistic and greedy corruption of the Old World.

In the New World, they wanted to erect a New Jerusalem that would not only be religiously devout, but be built on a new foundation of communal sharing and social altruism. Their goal was the communism of Plato’s Republic, in which all would work and share in common, knowing neither private property nor self-interested acquisitiveness.

What resulted is recorded in the diary of Governor William Bradford, the head of the colony. The colonists collectively cleared and worked land, but they brought forth neither the bountiful harvest they hoped for, nor did it create a spirit of shared and cheerful brotherhood.

The less industrious members of the colony came late to their work in the fields, and were slow and easy in their labors. Knowing that they and their families were to receive an equal share of whatever the group produced, they saw little reason to be more diligent in their efforts. The harder working among the colonists became resentful that their efforts would be redistributed to the more malingering members of the colony. Soon they, too, were coming late to work and were less energetic in the fields.

As Governor Bradford explained in his old English (though with the spelling modernized):

“For the young men that were 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, without recompense. The strong, or men of parts, had no more division of food, clothes, etc. then he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labor, and food, clothes, etc. with the meaner and younger sort, thought it some indignant and disrespect unto them. And for men’s wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc. they deemed it a kind of slavery, neither could husbands brook it.”

Because of the disincentives and resentments that spread among the population, crops were sparse and the rationed equal shares from the collective harvest were not enough to ward off starvation and death. Two years of communism in practice had left alive only a fraction of the original number of the Plymouth colonists.

Realizing that another season like those that had just passed would mean the extinction of the entire community, the elders of the colony decided to try something radically different: the introduction of private property rights and the right of the individual families to keep the fruits of their own labor.

As Governor Bradford put it:

“And so assigned to every family a parcel of land, according to the proportion of their number for that end . . . This had a very good success; for it made all hands very industrious, so as much more corn was planted then otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little-ones with them to set corn, which before would a ledge weakness, and inability; whom to have compelled would have been thought great tyranny and oppression.”

The Plymouth Colony experienced a great bounty of food. Private ownership meant that there was now a close link between work and reward. Industry became the order of the day as the men and women in each family went to the fields on their separate private farms. When the harvest time came, not only did many families produce enough for their own needs, but they had surpluses that they could freely exchange with their neighbors for mutual benefit and improvement.

In Governor Bradford’s words:

“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 planting was well seen, for all had, one way or 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 hath not been amongst them since to this day.”

Hard experience had taught the Plymouth colonists the fallacy and error in the ideas that since the time of the ancient Greeks had promised paradise through collectivism rather than individualism. As Governor Bradford expressed it:

“The experience that was had in this common course and condition, tried sundry years, and that amongst the Godly and sober men, may well convince of the vanity and conceit of Plato’s and other ancients; — that the taking away of property, and bringing into a common wealth, would make them happy and flourishing; as if they were wiser than God. For this community (so far as it was) was found to breed confusion and discontent, and retard much employment that would have been to their benefit and comfort.”

Read the full article here  In Defense of Capitalism & Human Progress: The True Meaning of Thanksgiving: The Birth of Private Enterprise in America by Richard M. Ebeling.

Price fixing in any form only harms those people they are supposed to help. On his Nightly Business Report blog, Steven Horwitz, calls on Obama to heed the economic science of the minimum wage.

Economic theory predicts that raising the minimum wage will cause those employees who are least productive to lose their jobs. If we raise the minimum wage from, say, $6 to $7, it’s the same thing as saying “any worker who cannot produce $7 worth of value each hour is not worth hiring.” Younger workers are, of course, among the least skilled in the economy. In addition, thanks to poor schools and historical discrimination, young workers of color are over-represented in this category. Higher minimum wages should disproportionately affect young workers and especially ones of color.

The empirical evidence to support this theoretical claim is abundant. Hundreds of studies of this relationship have been done by economists and they are nearly unanimous that higher minimum wages are associated with some level of increased unemployment among lower-skilled workers. Whatever consensus there might be among climate scientists about global warming, that among economists about minimum wage laws is at least as great (and, as we discovered recently, we don’t need to rig the computer code to make our models reconstruct pre-historic data to come out the way we want). Despite what the science says, the Obama Administration supported a minimum wage increase last July.

The results are as theory predicts: unemployment among whites age 16-19 is at by far the highest rate in 10 years: 25.3% in October, up 28% from 6 months earlier and 36% from a year ago. Among African-Americans of the same age group, the unemployment rate is an intolerable 41.3%, up 19% from April and up 25% from a year earlier. The Hispanic or Latino youth unemployment rates are 35.6% (October), 26.5% (April), and 28.3% (October 2008).

The recent increases in the minimum wage cannot explain all of this increase, as unemployment rates have climbed across the board. However, the overall unemployment rate last April was 8.9% compared to 10.2% today. That’s a 14.6% increase, notably less than the increase in the unemployment rate for young people of any race. So a good chunk of those youth unemployment increases are not just a by-product of the general increase.

If Obama really wants to take science seriously and live up to his promise of being the president for all of America, he could start by asking Congress to repeal the recent increases in the federal minimum wage and thereby give young workers something to really be thankful for this time of year: a much better chance at an entry-level job in an increasingly difficult job market.

via XChange – The NBR Blog.

Again, whether a price ceiling or a price floor, only harm is caused. Also, the harm isn’t felt just by the person who loses the job. The rest of society loses out on the production that would have otherwise been created. Even though it may be a lesser value of production, it is still production. For example, say you have a landscaping company. You pay your student workers, that are off on summer break, $6 an hour. With the rates you are charging, you are able to capture 100 clients. With the revenue from those 100 clients, you have a budget to fund four grass cutters. Now, the minimum wage gets forced up by the government to $7 an hour. Well, now you still have the same rates coming in from 100 clients, but you no longer have the same budget. You have three options. You can layoff one of your guys, you can raise prices or you can cut costs elsewhere. If you lay off one of your guys, how are you going to do the same volume? If you raise prices, demand will go down? If demand goes down, you don’t need the same amount of lawn boys, so you’d end up laying one off anyways. Cutting costs elsewhere only helps if you were  inefficient in the first place. If you were inefficient, you would have been charging too much and not had as many clients to begin with. Also, there typically isn’t tons of overhead in minimum wage jobs, so the chances of cutting your way out of it to save jobs is very slim. This leaves us really two options, both of which results in lost jobs. On top of that, both lead to a reduced amount of customers having their demands met. Only the ones who can afford it will continue to have their lawns attended to. Typically, they are smeared as the rich. So, while the regular Joe might have been able to afford the luxury of having his lawn cut previously, he now cannot, thus hurting the regular Joe and the young worker.

Here in Pittsburgh, our local talk radio personality, Jim Quinn, has what he calls Quinn’s first law. Qinn’s first law is “liberalism creates the exact opposite of it’s stated intent”. I’ve tried finding examples of when this doesn’t hold, but I have yet come up with one.

This video is kind of funny. Money’s price, the interest rate, should float on the free market like any other commodity, but you can tell that the other hosts have never even considered that  a possibility. They keep going back to the independence of the Fed, and how can they properly raise interest rates when it’s unpopular. All these “capitalists” for some reason love central planning when it comes to money.

I never heard Santelli talk monetary policy. I never knew who he was until he called for tea parties. As if calling for tea parties wasn’t enough, talk of how bad the Fed is is even better.

via Paul: Audit the Fed – CNBC.com.

Robert Wenzel shows how the media is reporting numbers more favorable to the theme of a recovery, but when analyzed closer, things don’t look so good.

The media is reporting that for the week ending Nov. 21, the figure for initial jobless claims was 466,000, a decrease of 35,000 from the previous week’s revised figure of 501,000 that has been released by the Labor Department.

But this is a seasonally adjusted number.

Without the Labor Departments special “seasoning” the number of actual initial claims under state programs totaled 543,926 in the week ending Nov. 21, an increase of 68,080 from the previous week.

Thus, the Labor Department numbers have swung the jobless claims picture by over 100,000 for the last week, from a decrease to an increase.

Which means, if you applied for unemployment last week there is a one in five chance your claim has been seasonally adjusted from the data.

Happy Thanksgiving.

via EconomicPolicyJournal.com: A Second Look at the Lower Initial Jobless Claims Number.

Some in Congress are calling for a bi-partisan panel on ways to cut the deficit. As you can imagine, I’m laughing my butt off right now. Can you imagine telling your spouse you  need to get an outside advisor to help you figure out why you are getting further into debt as you go out and buy a bunch of stuff you don’t need on your credit cards?

By JONATHAN WEISMAN and JOHN D. MCKINNON

WASHINGTON — The White House is considering a bipartisan commission to tackle the nation’s swelling deficit, as it seeks to show resolve on a problem that threatens its broader agenda.

Top White House officials, including budget director Peter Orszag, met Tuesday with Senate Budget Committee Chairman Sen. Kent Conrad to discuss establishing such a commission, which has been pushed by Mr. Conrad, a North Dakota Democrat, and his Republican counterpart on the committee, Sen. Judd Gregg of New Hampshire.

Chuck Marr, a budget aide to the Democrats’ former Senate Majority Leader Tom Daschle, said some kind of commission or budget summit could be the only way to bring Republicans into the decision making in the hopes of generating support for cutting cherished programs or raising taxes.

So now the Democrats want to bring in Republicans to support cutting cherished programs. Isn’t this as they are about to pass a huge new program that isn’t supported by Republicans?

But House Speaker Nancy Pelosi (D, Calif.) and senior Democrats such as House Appropriations Committee Chairman David Obey of Wisconsin have vociferously opposed delegating tough decisions to outside panels or commissions.

Taking concrete steps to cut spending and raise taxes, always politically difficult, has become even harder given the U.S. economy’s weakened condition. With projected deficits averaging more than 5% of gross domestic product over the next decade, the enormity of the task makes it more daunting. So does the looming 2010 election, when Democrats face the possibility of big losses.

via White House Weighs New Panel to Tackle Deficit – WSJ.com.

Holy crap! Who would have thought I would ever agree with Nancy Pelosi. I better reconsider my belief. I was under the impression that we elect these idiots to make the tough decisions. I didn’t think we elected them to create panels anytime things are politically tough to do. They say it’s politically difficult, but yet it seems people on all sides are complaining about the deficit. The only difference seems to be where each side thinks the cuts should come from. I have a great idea that will solve this. Cut everything. Pass legislation that will move towards the end of medicare, social security, etc while protecting those who are on it or will be on it shortly. Young people know they will not get any of these benefits, so quit robbing them to pay for a failing system. For the left, shut some damn bases down around the world. Do we really need the cost of bases in Germany, Japan, South Korea, etc?

Was that hard? Do we really need a commission to make a report that probably wouldn’t include common sense ideas anyway? Now that this has been put out there, congress can use it. They don’t even have to pay me. Well, maybe they could let me not pay taxes for a few years.

A recovery still is looking unlikely. I’m sure glad we spent $800 billion on TARP, you know bailing out Wall Street to bail out Main Street.

By DAMIAN PALETTA

U.S. lenders saw loans fall by the largest amount since the government began tracking such data, suggesting that nervousness among banks continues to hamper economic recovery.

Total loan balances fell by $210.4 billion, or 3%, in the third quarter, the biggest decline since data collection began in 1984, according to a report released Tuesday by the Federal Deposit Insurance Corp.

via Lending Declines as Bank Jitters Persist – WSJ.com.

There has been a lot of buzz about Obama’s Race to the Top program to improve public education. Currently, the Education Secretary Arne Duncan, Newt Gingrich and Rev. Al Sharpton are traveling the country together to promote the program.In this morning’s Wall Street Journal, former congressman Harold E. Ford Jr, a former IBM Chairman and a founder of The Broad Foundations wrote an article calling for accountability for President Obama.

By HAROLD E. FORD JR., LOUIS V. GERSTNER JR. AND ELI BROAD

For decades, policy makers have talked about significantly improving public education. The problem has been clear: one-third of public school children fail to graduate, there are embarrassing achievement gaps between middle-class children and poor and minority children, and the gap between our students and those in other countries threatens to undermine our economic competitiveness. Yet for the better part of a quarter century, urgent calls for change have seldom translated into improved public schools.

Now, however, President Barack Obama has launched “Race to the Top,” a competition that is parceling out $4.35 billion in new education funding to states that are committed to real reform. This program offers us an opportunity to finally move the ball forward.

To that end Mr. Obama and Education Secretary Arne Duncan are pushing states toward meaningful change. Mr. Duncan has even stumped for reform alongside former Republican House Speaker Newt Gingrich. Yet the administration must continue to hang tough on two critical issues: performance standards and competition.

First, I must say Newt Gingrich in pursuit of trying to be bipartisan has become a stooge of the left. If he thinks giving his support is going to get any real reforms, he’s become Charlie Brown hoping Lucy won’t move the ball this time. What’s worse is no one will no if he doesn’t agree with the ultimate outcome, but his name will be used for what will be called a “bipartisan effort”.

Already the administration is being pressured to dilute the program’s requirement that states adopt performance pay for teachers and to weaken its support for charter schools. If the president does not remain firm on standards, the whole endeavor will be just another example of great rhetoric and poor reform.

Competition among the states is also vital to reform. The administration is resisting the temptation to award funds to as many states as possible. And that’s good. To be effective, Race to the Top funds cannot become a democratic handout. Competition brings out the best performance. That’s true in athletics and in business, and it’s true in education.

Wow, all the sudden liberals realize competition among states is vital to reform, and competition is what brings out the best results? Who said progress isn’t being made. If they now realize this, can we make more moves back towards federalism, in which we had states competiting? Better yet, how about we get the federal government out of education altogether? How can you have competition when the government always promotes one size fits all policy on all states? Can we remove much of the federal laws and allow states to compete for the best standards of living? Citizens can then again vote with their feet. When the federal government creates national laws, citizens cannot hold states accountable. It doesn’t matter where you go, you still have to deal with the federal law. Your only choice is to leave the country, which ultimately harms our country.

The old way of doing business would be to spread around the money so no one could be held accountable. The new approach is to give governors authority and responsibility, and then hold them accountable for results.

For decades, adult interests have been at the forefront of public education. Reform has been derailed by adults who wanted to protect the status quo and enjoy lifelong benefits. This time the focus will be on learning in the classroom. What’s important is that the administration is demanding that every child receive an education that prepares him or her for college or for work. Without that we will continue to be sidetracked by insignificant issues.

Again wow, some truth from these guys. Ok, so now I must ask if we know this, then why aren’t we redoing all the federal dollars? Why are we continuing to spread money around?  According to the Department of Education’s website here is how much money they are spreading around with no accountability.

ED currently administers a budget of $62.6 billion in regular FY 2009 discretionary appropriations and $96.8 billion in discretionary funding provided under the American Recovery and Reinvestment Act of 2009

via U.S. Department of Education Budget Office.

Wow, imagine what we could do if we actually focused over $150 billion on the classroom? Instead you have teacher’s unions setting up life long cushy jobs and retirement plans that private sector workers could only dream about.

States that have the track record and leadership in place to implement Mr. Obama’s aggressive reform menu—of enforcing rigorous academic standards, creating data systems that track individual student performance, ensuring teacher quality and effectiveness, and turning around failing schools—deserve the funds to show that our public schools can again lead the world.

We have yet to prove, on a systemic basis, that we can dramatically improve America’s public schools. Race to the Top is a chance to start small, hold states accountable, and expand proven reforms to the rest of the country.

via Harold E. Ford Jr., Louis V. Gerstner Jr.,And Eli Broad: Race to the Top in Education – WSJ.com.

Ok, here is the root of the problem. You are rewarded based on your record of implementing “Mr. Obama’s agressive reform menu”. The problem is the whole damn thing is captive to politics. Assume this policy improves results. After Obama is replaced, you then have to worry about who’s menu is next? I’m not saying Obama’s menu is good, because I don’t know what it is. The problem is you hold the carrots way above where the work actually takes place. The further you get away from the end participants, the harder it is for you to dictate good policy and the harder it is to know what’s working.

If you want real reform, the federal government should get out of education. Governors should then open education to all providers public and private. Parents should be able to take either their own taxes or their allocation of taxes per student to any school they want. This would generate massive competition and a massive improvement in the education of children in this country. Even the writers of this article admit that competition is what generates results. Are they advocating only a little competition? Don’t they want spectacular results, or are they too afraid they’d loss their political power?

Think we have a moral government? What kind of government tries to pillage families when a loved one passes? That is what the government does with the death tax.

Kevin Hancock simply wants to harvest trees — sustainably — and create jobs in the process. The federal government may put a stop to all that.

His business, Hancock Lumber, has been in the family for six generations. It owns 30,000 acres of Maine timberland and employs 550 people. But Kevin already knows that when his elderly mother dies, he’ll have to sell off huge swaths of his land to pay the ensuing tax bill.

He recently warned a Senate committee that “once it has been sold to a developer, it will be parceled off and will no longer be maintained as publicly open forests. This is particularly a shame in southern Maine, where green space and curtailment of sprawl is a major political issue.”

It’s an example of the long reach of the death tax — the penalty families have to pay when a loved one dies and leaves them significant assets. Yet, for Hancock and many others, some relief may be in sight.

In 2001, lawmakers passed a law that gradually phased out the levy. The death tax has been stepped down from 55 percent (for those in the top tax bracket) eight years ago to 45 percent. But that gradual decline was just a prelude for 2010, when the tax will — finally — disappear altogether.

Unfortunately, like the killer in so many slasher movies, the death tax could return to menace family businesses again in 2011. Unless Congress acts, it’s scheduled to return to the obscene 55 percent rate after next year.

via Time to bury the ‘death tax’ – Pittsburgh Tribune-Review.

Wonder how many of the 550 people Hancock Lumber will have to layoff when they have to sell off their land to pay Uncle Sam? I wonder how many employees are hoping that Kevin Hancock’s mother dies next year, so they don’t lose their jobs? The death tax is completely immoral. Taxes have already been paid as the wealth was earned, and yet they try to take huge chunks of it from the very people the deceased person worked to hard to save for.

I want to know if any of these so-called scientist are going to go to jail? If anyone in corporate America had committed fraud one tenth the size of this fraud, they’d be tried in the media and locked up in short order. We threw Martha Stewart in jail for selling a stock on insider information, a crime that shouldn’t even be a crime in the first place. Bernie Madoff’s ponzi scheme did harm to others. In no way was his crime inflicted on every man, woman and child in the world, and we sent him to jail for 150 years.

It could be the smoking gun that finally quashes the climate-change industry.

The Daily Telegraph of London reports that some of the world’s top climate scientists engaged in nothing less than fraud to perpetuate the theology that man is responsible for supposedly cataclysmic global warming.

The purported evidence comes in the form of thousands of e-mails and other documents pilfered from the computer servers of the world-renowned University of East Anglia Climatic Research Unit.

One e-mail “refers to a ‘trick’ being employed to massage temperature statistics to ‘hide the decline’ in temperatures.” Which only solidifies the credibility of those who contend the “science” of global warming is anything but “settled” and is in every way “junk.”

Couple this revelation with a new book by Christopher Booker that, claim by claim, debunks what the grim reapers of climate change have been peddling.

Nevertheless, the world’s politicians are “proposing the most damaging measures ever put forward in history — cuts in carbon emissions, if implemented, would plunge our world back to the Dark Ages — to meet a crisis which it now seems was never going to happen anyway,” writes Mr. Booker.

It’s time to end this madness.

via Climate fraud – Pittsburgh Tribune-Review.

Hopefully, we can now move beyond this fraud, and get back to creating energy, unleashing business enterprise and reducing costs of energy for all Americans.

For anyone who thinks we’ll be pulling out of this recession anytime soon, you may want to think again. Even if we do pull out, it will more than likely be temporary. Unfortunately, the government is crowding out private investment by killing financing to the privates sector. George Melloan, author of “The Great Money Binge: Spending Our Way to Socialism” writes in the Wall Street Journal.

For anyone who wondered if last winter’s federal seizure of the financial services industry would have adverse economic consequences, an answer is now available. The credit market has been tilted to favor a single borrower with a huge appetite for money, Washington. Private borrowers, particularly small businesses, have been sent to the end of the queue.

The Federal Reserve, which supervises some 7,000 banks, has been telling bankers that they must cut risk. The most spectacular step in that effort was the Fed announcement last month that it will evaluate the salaries of bank officers on how carefully they manage risk.

By official definition, Treasury securities are risk-free, so how better to manage risk than to pad your bank’s portfolio with Treasury securities, which is what bankers are doing. Under the new management from Washington, bankers who take a flyer on a venture that might some day become an Apple, Microsoft or Google will risk not only their depositors’ money but a possible pay cut. Banking has been captured by the nanny state, which means that its potential for contributing to economic growth and job creation has been sharply curtailed, even as its potential contribution to government growth has been expanded.

The federally dictated risk-aversion was underway even before the Fed began monitoring banker paychecks. According to the Fed’s September flow of funds report, commercial banks were net buyers of Treasury securities to the tune of $25 billion on an annualized basis in the second quarter. They were net buyers of federal agency paper—think Fannie Mae and Freddie Mac—at an annualized rate of a whopping $185 billion, contributing mightily to federal efforts to keep these miscreants afloat. Meanwhile, private lending, which once was the mainstay of banking, was shrinking at a $392 billion annual rate.

Washington hasn’t been able to milk the taxpayers sufficiently to finance its massive deficit. The Chinese are getting skittish as well. So tapping bank deposits is yet another avenue to a big pot of cash. As for the bankers, they’ve been awarded an easy life. Thanks to the Fed’s zero interest-rate policy, they can make a decent profit on “safe” Treasury and agency securities yielding 3% or more. The too-big-to-fail banks like Citi and Bank of America can draw on their big shareholder, the U.S. Treasury, if their capital needs further supplements. Bankers don’t have to worry about making risk judgments because they’ve been ordered to not take risks. So maybe the Fed is justified in cutting their salaries, since whatever banking skills they had—meaning the ability to assess risk—are no longer needed or wanted. An office boy could buy government bonds.

via George Melloan: Government Deficits and Private Growth – WSJ.com.