News & Analysis
Ron Paul Ties Obama in Polls, U.S. Polarization Grows
Income tax day, April 15, 2010, now divides Americans into two almost equal classes: those who pay for the services provided by government and the freeloaders. The percentage of Americans who will pay no federal income taxes at all for 2009 has risen to 47 percent. That isn't the worst of it. The bottom 40 percent not only pay no income tax, but the government sends them cash or benefits financed by the taxes dutifully paid by those who do pay income tax. The outright cash handouts include the Earned Income Tax Credit (EITC), which can amount to as much as $5,657 a year to low-income families. Other financial benefits can include child tax credits, welfare, food stamps, WIC (Women, Infants, Children), housing subsidies, unemployment benefits, Medicaid, S-CHIP and other programs. – Phyllis Schlafly, TownHall.com
Dominant Social Theme: It's not fair, and it's planned that way.
Free-Market Analysis: Phyllis Schlafly has been sounding the alarm about the degradation of American freedom for virtually her whole public career. And this article about taxation is no exception.
She's very worried that a country in which 50 percent pay significant taxes and 50 percent pay no taxes is bound to be a country divided by factionalism and mistrust. Tax policy in this case, she believes, is being used to create a permanent underclass dependent on government that will vote for yet more government programs and undermine whatever is left of the nation's republicanism and classical liberalism.
But in commenting on her editorial, we want to point out that there may be a larger and more fundamental two-class problem in the United States. This problem has to do with the polarization in the US of the super-wealthy and America's increasingly problematic middle class. To us, this is a far more profound problem, even, than the US tax structure and the resentment it fosters. The growing polarization between rich and poor is symptomatic of inequitable and authoritarian countries that have little freedom and static and non-innovative societies.
Wherever government is intrusive, society polarizes in this manner. America, with an entrepreneurial culture and vast middle class has proven to be resistant to this sort of polarization. But the economy itself, with its dependence on central banking and its regulatory emphases when it comes problem solving, is geared toward continuing polarizations (from both a tax and income point of view). Central banks issue great gouts of paper money that causes booms and then busts. And with every bust, jobs are lost and never regained and government steps in to "help" those who have lost their livelihoods.
The good news – whether it has to do with taxes or fiat money – is that the Internet (which Schlafly has used to great effect) has virtually shattered the consensus over what only a few decades constituted a modern economy. While it would seem obvious (to us anyway) that a power elite had organized Western societies in a way that continually exacerbates these problems, there is considerable pushback throughout the Western world to a continuation of these policies.
Perhaps the most startling statistic as regards such a pushback can be seen in recently announced polling that libertarian/Republican Congressman Ron Paul (R-Tex) (pictured above left) is in a statistical dead heat with current president Barack Obama. Ron Paul's classical liberal views (gold-as-money, a modest, Constitutional government and a revivified, entrepreneurial middle class) have struck a chord. Here's something from the Washington Examiner (via AP) on Ron Paul's surprising poll numbers:
Hating the government finally goes mainstream ... Three years ago, the Republican establishment piled scorn on the presidential candidacy of Ron Paul. Today, he is in a statistical tie with President Obama in 2012 polling. His son, an ophthalmologist who has never run for elective office, is well ahead of not only the GOP's handpicked candidate for Senate in Kentucky but also both Democratic contenders – all statewide officeholders.
What happened? Did America suddenly develop an insatiable appetite for the 74-year-old, cranky congressmen from Texas? Is the gold standard catching on? Paul will not likely be the next president. And his son still faces the most arduous part of his journey as Democrats spend millions to paint him as soft on defense, lax on drug enforcement and too radical on welfare programs.
But there's no doubt that hating the government and the powerful interests that pull Washington's strings has gone from the radical precincts of the Right and Left to the mainstream. It turns out that watching Goldman Sachs, the United Auto Workers, public employee unions and a raft of other vampires drain the treasury at America's weakest moment in a generation will make a person pretty hacked off.
The idea that Ron Paul could poll alongside Barack Obama is most startling when one considers only a decade ago that Ron Paul's ideas and political perspectives where seen as hopelessly anachronistic. In Congress he was known as "Dr. No" because he would not vote for laws that contravened the US Constitution. But he was virtually a constituency of one in the House of Representatives and seen by many within the political community as an anomalous crank.
Ron Paul's ascension, based on classical-liberal lines that hearken back thousands of years to the Athenian Greek city-state, is a perfectly logical reaction to the evisceration and polarization of civil society undertaken by the power elite over the past century or so. That his message has been heard by so many within the past few years is a testimony not only to the power of ideas but to the power of the Internet itself, which has spread his platform of freedom far and wide.
There are many within the libertarian community and the larger Internet-based alternative media who still do not believe the Internet is a fundamental "game-changer" insofar as Western societies are concerned. But it is the Bell's firm position that the Internet's communication revolution is only starting to be felt. It is far too late to "ban" the Internet in Western society, for its free-market ideas have already spread throughout Western society both in America and Europe. They have affected China as well.
The current system of Western governance – polarizing in so many ways – has been all-but-shattered by freedom-oriented solutions promoted by the Internet. Many observing the impact that the Internet is having on the West's sociopolitical environment continually make the mistake of perceiving its influence as static. But it is not static. The Internet's aggregate message is evolutionary, one that is therefore resistant to the kinds of strategies that the power elite has used in the past to beat-back free-market thinking.
Conclusion: There is nothing so powerful as an idea whose time has come. Western society is polarized today. But increasingly the polarization is between those who believe in freedom and those who cling to destructive status-quo that has been organized and implemented by a power elite using spurious dominant social themes. These themes – promotions really – have intimidated the West and continually concentrated power and wealth in the hands of a few. Tomorrow such promotions may be increasingly difficult to implement. We believe a renewal (at least a modest one) of Western freedoms could result.
Posted by JoAnnCr on 04/19/10 06:53 AM
A lot of those people who pay no taxes are those who are wealthy but have a great tax accountant. Do your homework.
Reply from The Daily Bell
And pay NO taxes?
Posted by Cynthia Johnson on 04/17/10 10:28 PM
I agree with Mr. Murphy's post regarding a complete house-cleaning in Congress, but with Dr. Paul elevated to President. To that end, I've joined the GOOOH (Get Out Of Our House) Party movement, which promotes term limits and a return to elected officials being public servants rather than career politicians. With the exception of Ron Paul, I'm sick of the whole damn lot of 'em!
Posted by Lyn on 04/17/10 04:46 PM
Many, Many thanks to Patrick McDonald for his feedback and to the Daily Bell for printing it. Your angst is shared a hundred fold and your courage to speak so openly as to your reasons for it is appreciated far more than you can ever know. Godspeed, Mr. McDonald. You are not alone.
Posted by Cossack55 on 04/17/10 04:32 PM
I have read that only 3 percent of the population actively supported/engaged in the Revolutionary War. I would posit that only about 3 percent today understand LIBERTY and would embrace it and all the responsibilities and risks inherent in that choice. I am unsure of the outcome.
Posted by Jack Swift on 04/17/10 10:29 AM
Peter Pendy wrote, "Enough is enough everyone deserves to live a good life and the ability to work and in return be able to pay their bills because of getting enough pay."
This is an echo of FDR's call for a second bill of rights. "Deserves" isn't really a right but an entitlement which government is supposed to provide. What the Chicago Law School calls a "constitutive commitment."
I submit it entails a fundamental misconception of government and as noted above, has no correlation to any concept of economics.
Everyone deserves the rewards of his production. Absent production he has not earned or merited anything. All that he can be claimed to deserve is a humane claim upon our charity. Unfortunately, government cannot succeed as an institution of charity. None such has ever succeeded.
Posted by Weeble on 04/17/10 07:13 AM
@ Peter Pendy aka PP:
Many a true word is spoken in jest. You were joking right? I could not write such a post, as I would have to take a cold shower between sentences....I have no problem with some of my tax money going to hurting low income families... jowch! It actually does hurt them.
Feeding from a feeding tube in a cage is a really nice life. Imagine taking home their gross pay right from the get-go instead?...I pity them... The dangerous premise for liberalism and beyond.
Read "Humaritarian With A Guillotine" by Isabel Paterson....everyone deserves to live a good life... everyone deserves to be left alone to decide which way they want to live. That would be a good life.
You infer socialism....give willingly and be grateful... is that like wearing a crown of thorns or a potato bag dress to work?"Check your premises" as Ayn Rand would say.
Posted by Pete Pendy on 04/17/10 04:24 AM
As far as money going to low income families - they do pay taxes just on a much lower scale because of their pay... I am all for the low income families getting a little tax money break once a year. Are there those who use and abuse? Always... Are there those that work hard and long hours with little pay while contributing with tax deductions? Always and how many? A lot!
I am a tax payer and always have been since I started working in 1969... I have no problem with some of my tax money going to hurting low income families... and I am so tired of hearing selfish people say it is not fair... let them live on the low income status and see how they like it... and if they have lived on low income in the past and have now grown cold and merciless..... I pity them...
Enough is enough everyone deserves to live a good life and the ability to work and in return be able to pay their bills because of getting enough pay. There is really enough to go around if only people would have a heart and give willingly and be grateful that they have an abundance to be able to share some of their blessing.
Posted by VR on 04/17/10 12:54 AM
FInally, Ron Paul is getting what he has earned, the hard way, and proven that 'you can't fool all the people all the time. VR
Posted by Weeble on 04/16/10 10:27 PM
@ Glen Williams:
That teflon suit sure makes you look Click to view linkanted, being a firefighter is a noble profession and I sympathize with your choice of work and your reasons for joining the Fire Dept (remove the delusions of grandeur and think of why you joined - I know why - time off, early retirement - nose bleed pension - people put their coats down in puddles for you as you pass by).
But come on, once the hyperinflation begins, and your pension seems like a token amount now, because it can't keep up with daily devaluation, you will then be giving back to Caesar, what is Caesar's.Don't think for a moment that you can work for 25 years, then sit back and sip Pina Coladas all day for the rest of your life using our money.
That does not compute.Productivity gains over the last 30 years have been eaten up by Government (and their agents - like you), so the producers are getting fewer and fewer. When does the scale tip?Er, it is happening right now.The PIIGS are on the wing (ha ha, charade you are!).Sorry, did not mean to be rude.
Posted by Weeble on 04/16/10 09:37 PM
The Bell is definitely a bellwether for the truth on the internet, like weather change is a bellwether for the IQ of the population. Ron Paul could win, but he will never win a Diebold counted election. In my view, he will only get in if the electorate becomes so apathetic towards the obamanable snowjob man that Ron Paul is physically sought out, driven to DC by friends, then plonked in as POTUS after the Ice Castle melts (down). If all goes well, the band of merry thieves will have already done Ron Paul's job for him. Patience, Ron. Patience. The King is dead, long live the King!
Posted by Juanito on 04/16/10 08:24 PM
I have given away all my Ron Paul books. I have given away Griffin's "The Creature from Jekyll Island". I hope with all my heart that the people to whom I gave them, will do the same,but only after reading what are the clearest, most excellent expositions of and solutions to the problmes that our country and the world face in the next decades. I voted for Ron Paul for President in 2008. I wlll vote for him again in 2012. End the Fed. Bring our troops home! End NAFTA! Reduce the size of our government! Increase states rights!
Posted by F. Porter on 04/16/10 06:46 PM
Dear Sirs: Ron Paul = the ONLY politician to whom I donate money. God bless Ron Paul and pray for America. F. Porter
Posted by Dan on 04/16/10 04:45 PM
Great article! You are correct, the pendulum is swinging back the other way and it's about time! -Dan
Posted by Bill Ross on 04/16/10 04:21 PM
Children used to be taught about the nature of despotism and what it takes to be free in civics class. This USED to be the mainstream consensus (proven FACT) before everything was hijacked by "experts" and our basic concepts (such as equality) redefined to completely subvert the crucial knowledge required for civilization and peaceful coexistence:
Click to view link
Posted by Chuck Dahmer on 04/16/10 03:51 PM
To my mind, both Obewan and Jack Swift have delivered accurate assessment on often misunderstood topics. As one currently working with a public-sector client, I must add that dealing with their arrogant misplaced sense of superiority is a serious challenge to accomplishing my task.
Jack Swift's excellent perspective is one that needs broader coverage. The billions of dollars misallocated to shaping land use, urban renewal, affordable housing, ad nauseam, are the product of a society without fundamental economic understanding.
Thomas Sowell has covered the issue for years, as well as the temporary status of "class."I read local publications daily from all over the world. Those providing the greatest insights are those with thoughtful comments from local readers. DB readers provide some of the best.
Reply from The Daily Bell
Thanks. We think so too.
Posted by Jack Swift on 04/16/10 02:56 PM
I'm just a crazy old coot living in backwoods Oregon but I see the disappearance of the middle class as a function of our national lack of production.
The classes - rich, middle, and poor - are not fixed in the United States. There is no caste system. Rather they are fluid and there is a great deal of mobility from one class to the other.
As the middle class acquire more and more assets it becomes easier and easier for them to transit to the rich. In that sense the middle class is constantly depleting as the rich get richer.
What is more difficult is the transition from the poor to the middle. Historically, when we were an industrialized nation, that transition was facilitated by the abundance of entry level jobs afforded by industry which in turn led ultimately to highly skilled employment. Entry to the middle class, if you will.
The only thing to appear in our economy to replace that lost opportunity is public service employment. The result is that the middle class is being depleted at the successful move on without replacement from below.
Another large political factor frustrating the poor is land use regulation aimed at frustrating urban sprawl. The simple market mechanics of sprawling land development always provides a mix of real property available - high cost, moderate, and low cost.
The constant availability of low cost initial investment again works to the advantage of the poor seeking to acquire assets. Concentrated, compact densification in high rise urban centers eliminates the availability of low cost real estate and again closes the door for the replenishment of the dwindling middle class.The sad part is that this is all the effect of conscious political manipulation.
Posted by Scott on 04/16/10 02:52 PM
I supported Ron Paul in the last election and when he didn't make it through the primaries I decided to vote for him anyway,
I just didn't have the stomach to cast a vote for either of the two losers that were picked by the ruling party. I honestly find it hard to believe that Paul didn't do better in the polls. Even now he can only barely match the returns granted to a proven disaster of a President.
I'm left almost convinced the people of this country are no longer qualified to choose their leaders, and that leaves me with a deep sense of despair.
So many people I talk to want change, but they keep voting for the same machine over and over again, always expecting a different outcome. It's puzzling. Some might call it insane.
At a financial summit I attended last fall I brought up Paul's 'Audit the Fed' bill (HR 1207). A professional political analyst and financial advisor responded to my question concerning the potential investment impact of the bill by saying 'if the bill passes it will destroy central banking, there's is absolutely no chance of that happening'.
One can hope that he was only half right and that the bill will pass, however I don't really think Dr. Paul is aiming at the right target. I look at the Fed as a kind of LLC for the US Treasury, a fictitious entity that has no assets and can't be sued. What really needs to be audited is the US Treasury, not the Federal Reserve. Where is our gold? Has it been leased many times over to JP Morgan? How many times have they sold it? To whom?
Posted by Kaydell Bowles on 04/16/10 01:50 PM
Your article about income tax earned is much more than $5600. Thus families who work under the table and not show any income purposely keep their income low have a very good pay back after April 15. The situation in America is where the elected leaders legally takes money from those whose right it is to keep and gives money to those who have no right to receive. This is to keep them in power and people voting them to keep giving them money and entitlements. All for their wants and not basic need. In 2005 five the American spent 195 billion dollars on sport. Another 17 billion in movie entertainement and movie dvd rentals or purchases. Then they want free health care.
Posted by C Oswin on 04/16/10 01:35 PM
The government is worried about anger from the people in the tea party and militias?
what they don't want to see is the anger that will come from the people who have been receiving the governments gifts. When the easy money is gone, the credit is gone and the gifting is gone what then? These people will turn on them in an instant with a viciousness they don't expect and are not prepared for.
The french revolution was not just one reign of terror it was three reigns of terror spanning a generation, a lost generation. Let us hope it doesn't get that bad. We need to pray that enough people understand a vote for less government is a vote that is in your own self interest. An example of the virtue of selfishness.
Posted by Glenn Williams on 04/16/10 01:22 PM
The U.S. should adhere closer to the U.S. Constitution and its guidelines, for that is the principals on what this country was founded on.
Our founding fathers would probably be rolling over in their graves if they knew what was going on today. We are gradually turning into a socialist country like our European counterparts, however I take offense when you state one of its root causes is public employee unions.
I am a retired firefighter with a municipal pension. At the time I was hired it was hard to recruit municipal employees due do the pay discrepancy between public and private sectors. They enticed employees with retirement benefits and health care packages by contract.
Now after the fact, the private sector has dropped some of the perks that they used to attract all the high paying job prospects to their companies, people are complaining about my benefits after I retired under a contract.
New employees know what contract they are hired under and they take the job, that's fine. The blame of the current economic condition should fall firmly on the shoulders for which it belongs, fifty plus years of bad foreign policy, currency that has no metal backing (fiat), free money, too many government subsidies (when you give people money they don't earn, they expect it. where is the incentive to go find work.), and too many corrupt politicians with their hands in every-ones pocket.
Most public employees are hard working American citizens who take pride in protecting the public, and keeping the infrastructure of America functioning properly so every-one can do their jobs. So please don't use the public employees as your scapegoats, focus the blame where it belongs.