Turkey at the start of one-man rule

1. Yesterday (Monday) Recep Tayyıp Erdoğan took office under the system of executive presidency, which gives him arbitrary personalised powers, based on the claim that a system of such extreme powers for one person is the most democratic system if that person is elected. The changes came about as the result of a referendum last year, which gave a narrow victory for the constitutional changes. It seems to me, and many others, that rigging allowed victory in the election. For the first time in Turkey, all ballot papers unstamped by an electoral officer were counted, allowing unlimited fraud. There are other issues about intimidation and irregularities, but this is not the moment to go into further detail, but I will just point out that radical changes to the constitution were ‘legitimised’ by pseudo-democratic fraud.

2. The constitutional changes enable the President to: legislate by decree, appoint most Constitutional court judges, appoint the army chiefs, appoint police chiefs, appoint all higher level members of the bureaucracy, appoint government ministers and vice-presidents without reference to the National Assembly. There is no Prime Minister. The President, Vice-Presidents, and Ministers are not obliged to answer questions in the National Assembly. In principle the National Assembly can reverse decrees as laws, but to allow the President to legislate in such an unaccountable way in the first place undermines all understanding of what a national assembly is for and what the limits on the head of government or head of state (now the same person) should be in a state which is constitutional and democratic.

3. Ministerial appointments have most notably included the elevation of Erdoğan’s son-in-law, Berat Albayrak, to the Ministry of Treasury and Finance. Albayrak is a major businessman whose rise in business and then politics have taken place since Erdoğan became the most powerful man in Turkey in 2002.

4. Other appointments have given business people ministerial posts for areas of the economy in which they have a dominant market position. Erdoğan’s own family doctor who owns a medical business is health minister. The education minister owns a private college.

5. The appointments of business people and a son-in-law show carelessness about propriety in the separation of the administration of public affairs from private and family interests, to put it in the mildest way possible. It also suggests that Erdoğan thinks he is too big for the party which brought him to power, AKP. It has been clear for some time that the most powerful people in the AKP are this son-in-law and one of the sons. That is, the AKP exists as a vehicle of one family, and its businesses associates. In this case, it is hardly a properly functioning democratic party.

6. The appointments were preceded by a presidential decree on the appointment of the governor and vice-governors of the central bank, which reduces its autonomy and makes it more vulnerable to Presidential pressure. Erdoğan has clearly been struggling to live with central bank decisions to raise interest rates in response to inflation and the falling value of the Turkish Lira. Anyway, the currency lost 20% of its value and inflation is at nearly 16% though the central bank’s target is 5%.

7. Market confidence in Turkey, even of a very minimal kind, was resting on one man, Mehmet Şimşek, who has western training in economics and is the last remnant of the days when the AKP appeared to many to be a centre-right reformist party, and did manage to behave in part like such a party. Şimşek appears to have been increasingly unhappy with his situation, putting a rational face on polices he knows are going in the wrong direction, occasionally winning battles to raise interest rates. One of Erdoğan’s main obsessions is that interest creates inflation. He has found it necessary to curtail that belief on occasions. Şimşek apparently wanted to resign from government recently, but no one ‘betrays’ Erdoğan in that way. Şimşek was bullied into staying and has now been sacked. His replacement is Erdoğan’s son-in- law. The markets have been spooked and the lira fell very sharply yesterday evening.

8. The Erdoğanists do have a solution to lack of international market confidence in Turkey. It is to create a Turkish ratings authority which will rate Turkish government credit as the government wishes! This absurd proposal, which will only reduce the credibility of the lira and government debt, shows the depths to which economic policy run on political paranoia has sunk in Turkey. Political paranoia because low credit ratings are due to foreign conspiracies!

9. Going back to last month’s election, about 2% of ballots cast have been declared invalid by the Supreme Electoral Council. HDP (Kurdish rights and leftist party) has pointed out that most ‘invalid’ ballots are from polling stations where it did not have observers. The HDP is defined as ‘terrorist’ by the followers of Erdoğan and its presidential candidate is in prison on ‘terrorism’ charges. This is all based not on credible evidence of co-operation with the PKK, which does have common roots with HDP, but on absurdly broad definitions of terrorism which take in people who do not oppose the PKK enough or which offer any criticism of state policy towards the PKK.

10. Based on point 9, it looks very much like 2% of votes cast were spoiled to take votes from the HDP. It hardly seems likely that would be the limit of fraud. As mentioned in point 1, all ballots were counted which did not have the basic security guarantee of a stamp from an electoral official on the ballot itself or the envelope containing the ballot. It is inherently difficult to arrive at accurate figures in this matter, but it looks very much like at least 4% of the ballot was fixed (that would merely double the most obvious form of rigging, which I do not think is an extravagant assumption, after all most rigging will take place in very hidden ways). If I am correct then the pro-Erdoğan electoral list for the National Assembly did not get a majority of votes and Erdoğan did not get a majority of votes in the presidential election.

11. The government-state machine extends claims that the HDP is terrorist to the main opposition party, CHP, on the grounds that the CHP has offered some criticisms of the detention of the HDP presidential candidate, and that some CHP supporters voted HDP to help it overcome fraud and reach the 10% of votes necessary to enter the National Assembly. CHP provincial leaders have been banned from attending the funerals of soldiers killed by the PKK, soldiers who in some cases will be CHP supporters, showing the kind of spite, vengefulness, and abuse of state power driving the AKP.

12. The Istanbul municipal government has announced that public transport will be ‘only’ half price during next month’s Kurban Bayram (Sacrifice Festival; religious festival and public holiday) instead of free as has been normal for a long time. This shows the strains that public finances are under in Turkey. The AKP are specialists in providing ‘free’ benefits to electors, along with favours for individuals and families, building up a base in local government in this way before they came to power nationally. The Istanbul news is a small thing in itself, but is suggestive of a decline in the capacity of the AKP to use public money to buy votes.

13. Given increasing personal indebtedness, rising inflation, the falling value of the currency, the decline of foreign investment and the credibility of government debt instruments, we could see some very difficult economic times in Turkey. It is clear that this process was important in holding the recent election 18 months early. The loyalty of the AKP and Erdoğanist base is intense, but was formed at a time of economic growth and expanding public services. We see going to see what happens to loyalty in less happy circumstances.

Inflation in Canada and the US since 1774

It is often said that Canada and the United States are very much alike, except for the fact that Canada has tons of French people (myself included) and free (TANSTAFL) healthcare. It is also often said that when the US economy catches a cold, Canada gets pneumonia.

From an economic historian’s perspective, this is a hard claim to swallow without making tons of nuances. Yes, economic conditions in Canada are heavily affected by those in the US. But, the evidence for that generally concerns the twentieth century. There is very little before that. The first pieces of evidence we have for Canada start only in the 1870s. In fact, that evidence is also subject to many caveats (my work with Michael Hinton suggests that the GDP deflator for Canada from 1870 to 1900 causes a considerable underestimation of Canadian economic growth during the period and that Canada).

Thus, we do not know if that was always true. To some extent, I am tempted to believe that this is true, but that it is has grown “truer” over time. Canada used to be geared towards Britain and Europe for a long time, but, progressively, it became more connected with the United States. Now, the Maddison project data shows that Canada in terms of GDP per capita converged towards that of the United States from the 1870s to the present day. Morris Altman produced revised estimates of Canadian GDP growth (here) that show a moderately steeper convergence between 1870 and 1929. Given the amount of capital movements between both countries, this is not really surprising (in fact, excluding Quebec from Canada brings the two countries closer together).  But again, we don’t go back further than 1870.

So, to see if this is the case, I decided to take my paper (online since yesterday) on creating a price index for Canada since 1688. Measuring Worth offers an American Price Index that starts in 1774. If the two economies began to become more interlinked, then a price index that goes back to the founding of the United States should do the trick. The result is below.

pricescorrelation

I organized the data by time period and it seems that the rates are generally correlated (which you would expect since global monetary conditions do suggest some long-terms similarities in terms of price trends – I have many reservations about the book I am citing here, but it gets the empirical point across). However, the dispersion seems to collapse over time. As we move from the colonial era to the modern era, inflation rates get more tightly grouped together. Free trade, lower transport costs, central bank policy, capital mobility and labor mobility would have factored in to mean that things become more tightly knit.

It does seem like Canada and the US became more interdependent over time.

I have more to come on this!

Prices in Canada, 1688 to 2015

I have just finished my working paper creating a price index for Canada that covers the period from 1688 to 1850 in order to link with the existing datasets that cover up to 2015. Here is the result (and the paper is currently consideration for publication). The paper is here and it shows how much prices have changed in Canada since the late 17th century.

pricescanada

Undergraduate degrees are a stamp of participation

Here’s an article I wrote for my college newspaper ( = designed for a different audience). I’m mostly interested in the direction college “worthwhileness” is going alongside more opportunities for starting small businesses, entrepreneurship, etc.

Getting a degree is a stamp that says you participated in the established educational conduct. Wisdom, implementation and experience can all be achieved elsewhere. The worst misuse of this stamp is when administrations arbitrarily select it as their sole judgment of criterion, namely, other teaching facilities.

I’m interested in opinions and disagreements anyone might posit – particularly from any professors or postgraduate writers.

President Condemns Price Gougers, Dealers Raided

On one sunny August 16, at a time of high price inflation, government operatives announced the seizure of millions of eggs and 200,000 pounds of sugar. Raids on the larders of other suspected profiteers continued for weeks thereafter … The government was prepared to return these items to their owners once the chastened profiteers agreed to sell them at a “reasonable” price and under the watchful eye of a government officer.

The official in charge of the raids explained thusly: “I am one of those who believe that a large part of the high cost of living is due to the fact that a number of unconscionable men in the ranks of the dealers have taken advantage … If we can make a few conspicuous examples of gougers and give the widest sort of publicity to the fact that such gougers have been and will be punished, in the future there will be little inclination to profiteer in this country.”

Earlier, the President of the Republic had laid the blame for a lesser bout of price inflation squarely at the feet of gouging businessmen: “The high cost of living is arranged by private understanding” is how he put it.

By now you may have guessed that I am talking about present-day Venezuela, its Presidente, and his henchmen. You would have guessed wrong. The year was 1919, Woodrow Wilson was president, and his henchman, quoted above, was Attorney General A. Mitchell Palmer. The high cost of living was a result of Mr. Wilson’s war, which was financed partly by money printing, as well as the absorption of vast quantities of real goods and services by the government for use in fighting the war. The obvious effect of more money chasing a reduced supply of goods and services was price inflation, and that same phenomenon happened in all the warring countries, most notably France.

This episode provides one of many reasons, too numerous to elaborate here, why Woodrow Wilson is properly called a proto-fascist and why he is a serious contender for the dubious honor of worst-ever U.S. president. For more, see Jim Powell’s, “Wilson’s War: How Woodrow Wilson’s Great Blunder Led to Hitler, Lenin, Stalin, and World War II.

The first three paragraphs above are paraphrased from p. 24 of James Grant’s new book, “The Forgotten Depression.” Though I have not finished the book, I couldn’t resist sharing this tidbit. The gist of Grant’s thesis can be seen in its subtitle, “1921: the Crash that Cured Itself.” Highly recommended, so far.

How the Rentenbank Stopped Inflation

After World War I, Germany had to pay reparations to the United Kingdom and France. Having sold off its gold, the German government had no specie with which to back its currency, the mark. Therefore Germany issued fiat money, not backed by anything. It was called the Papiermark, the paper mark.

With its economy in ruins, the German government printed more and more currency with which to pay its bills, and the German expansion of money became the world’s most famous example of hyperinflation.

The inflation induced alternative currencies in Germany. In 1922, the Roggenrentebank was established, issuing notes backed by rye grain. In 1923 several local governments issued small-denomination loan notes denominated in commodities such as rye, coal, and gold. The commodity front served as a price index relative to marks for the notes.

The inflation came to a halt with the replacement of the Papiermark with a new currency, the Rentenmark on October 15, 1923*. One Rentenmark could be exchanged for a trillion Papiermarks.

The Rentenmark was fronted by bonds indexed to amounts of gold. Since the US dollar was backed by gold then, the Rentenmark was thus also pegged to the US dollar at 4.2 RM to $1. To “back” a currency means to exchange it for a commodity at a fixed rate. It was not enough to merely index the units of the Rentenmark to gold. To become stabilized, the new currency needed to be fronted by a commodity that was actually used. That commodity was real estate.

The Deutschen Rentenbank, the central bank of Germany, established reserves that included industrial bonds as well as mortagages on Germany’s real estate. A currency is fronted when the issuer has collateral that it can deliver in exchange for indexed units of the money. Real estate rentals payable in Rentenmarks were fronts for the new German currency. “Rente,” derived from French, means income in German, such as a pension.

After having stabilized the money, the Rentenmark was replaced by the legal-tender Reichsmark in 1924 one-to-one, although Rentenmark notes continued to serve as money until 1948.

Previous attempts to front a currency with land value failed, because such frontage is insufficient. In France during the early 1700s, John Law’s bank issued money on the collateral of land in Louisiana, but that hypothetical land value did not constrain the over issue of the banks’ notes. Then during the French Revolution, the government issued “assignats” on the collateral of confiscated church land, but that too did not prevent the inflation of the money.

Land rent cannot “back” a currency, since there are no uniform units of land that can be exchanged for units of money. But land rent can be a “front” for money when taxes are payable in that currency, which helps give that money its value. But that alone does not prevent an excessive expansion of the money. To stabilize the currency, it also needs to be backed by or indexed to some commodity. And gold has been a common and suitable backing for paper and bank-account currency.

The German experience also shows that the gold backing does not require large amounts of gold. It is sufficient for stabilization that there is some credible limit to the expansion of the money. The Germans were lucky in 1923 in having monetary chiefs such as Hans Luther of the Finance Ministry, and Hjalmar Schacht, Commissioner for National Currency, who maintained the gold index by limiting the expansion of the new currency.

But as the experience of France, shows, it is risky to depend on the integrity of monetary chiefs. Permanent monetary stability requires a structure of money and banking that is self-correcting. That structure is best provided by free-market banking, in which the real money (outside money) is some commodity beyond the control of the banks, and the banks issue “inside money” or money substitutes backed by the real money. Competition and convertibility prevent inflation.

Any kind of tax can serve to help endow money with value, but a land-value tax offers the greatest frontage for currency, because in effect, LVT acts as a mortgage on land value, and the government can take over land when the tax is not paid. Unlike with taxes on income, nobody goes to prison for not paying a real estate tax, because the rent serves as a reliable collateral. Land rent can serve as collateral not just for real estate loans, but also for taxation, and for currencies. All countries can have “renten money” when they covert from market-hampering taxes on production to market-enhancing taxes on the economic surplus that is land rent.

* This was corrected from an earlier typo listing the year as 2013 instead of 1923.

Unequal Poverty: Tricks (Part Two of two)

In the previous installment:

I explained how the general standard of living in America, denoted by real income, grew a great deal between 1975 and a recent date, specifically, 2007. This, in spite of a widespread rumor to the contrary. The first installment touched only a little on the following problem: It’s possible for overall growth to be accompanied by some immobility and even by some regress. Here is a made-up example:

Between the first and the second semester, grades in my class have, on the average, moved up from C to B. Yet, little Mary Steady’s grade did not change at all. It remained stuck at C. And Johnny Bad’s grade slipped from C to D.

Flummoxed by the sturdiness, the blinding obviousness of the evidence regarding general progress in the standard of living, liberal advocates like to take refuge in more or less mysterious statements about how general progress does not cover everybody. Or not everybody equally, which is a completely different statement. They are right either way and it’s trivial that they are right. Let’s look at this issue of unequally distributed economic progress in a skeptical but fair manner.

It’s awfully hard to prevent the poor, women and minorities from benefiting

I begin by repeating myself. As I noted in Part One, it’s too easy to take the issue of distribution of income growth too seriously. Some forms of improvements in living standard simply cannot practically be withheld from a any subgroup, couldn’t be if you tried. Here is another example: Since 1950, mortality from myocardial infarctus fell from 30-40% to 5-8%. (from a book review by A. Verghese in Wall Street Journal 10/26 and 10/27 2013). When you begin looking at these sort of things, unexpected facts immediately jump at you.

Fishing expeditions

The US population of 260 millions to over 300 million during the period of interest 1975-2007 can be divided in an infinity of segment, like this: Mr 1 plus Mr 2; Mr 2 plus Mrs 3; Mr 2 and Mrs 3 plus Mr 332; Mr 226 plus Mrs 1,000,0001; and so forth.

Similarly, the period of interest 1975 to 2007 can be divided in an infinity of subperiods, like this: Year 1 plus year 2; year 1 plus year 3; years 1, 2, 3 plus year 27; and so forth. You get the idea.

So, to the question: Is there a subset of the US population which did not share in the general progress in the American standard of living during some subperiod between 1975 and 2007?

The prudent response is “No.” It’s even difficult to imagine a version of reality where you would be right to affirm:

“There is no subset of the US population that was left behind by general economic progress at any time during the period 1975- 2007.”

Let me say the same thing in a different way: Given time and good access to info, what’s the chance that I will not find some Americans whose lot failed to improve during the period 1975 to 2007? The answer is zero or close to it.

This is one fishing expedition you can join and never come back empty-handed, if you have a little time.

Thus, liberal dyspeptics, people who hate improvement, are always on solid ground when they affirm, “Yes, but some people are not better off than they were in 1975 (or in _____ -Fill in the blank.)” The possibilities for cherry-picking are endless (literally).

Everyone therefore has to decide for himself what exception to the general fact of improvement is meaningful, which trivial. This simple task is made more difficult by the liberals’ tendency to play games with numbers and sometimes even to confuse themselves in this matter. I will develop both issues below.

To illustrate the idea that you have to decide for yourself, here is a fictitious but realistic example of a category of Americans who were absolutely poorer in 2007 that they were in 1975. You have to decide whether this is something worth worrying about. You might wonder why liberals never, but never lament my subjects’ fate.

Consider any number of stock exchange crises since 1975. There were people who, that year, possessed inherited wealth of $200 million each, generating a modest income of $600,000 annually. Among those people there were a number of stubborn, risk-seeking and plain bad investors who lost half of their wealth during the period of observation. By 2007, they were only receiving an annual income of $300,000. (Forget the fact that this income was in inflation shrunk dollars.) Any way you look at it, this is a category of the population that became poorer in spite of the general (average) rise in in American incomes. Right?

Or, I could refer to the thousands of women who were making a living in 1975 by typing. (My doctoral dissertation was handwritten, believe it or not. Finding money to pay to get it typed was the hardest part of the whole doctoral project.) One of the many improvements brought about by computers is that they induced ordinary people to learn to do their own typing. Nevertheless, there was one older lady who insisted all along on making her living typing and she even brought her daughter into the trade. Both ladies starved to death in 2005. OK, I made them up and no one starved to death but you get my point: The imaginary typists fell behind, did not share in the general (average) improvement and their story is trivial.

So, I repeat, given some time resources, I could always come up with a category of the US population whose economic progress was below average. I could even find some segment of the population that is poorer, in an absolute sense, than it was at the beginning of the period of observation. Note that those are two different finds. Within both categories, I could even locate segments that would make the liberal heart twitch. It would be a little tougher to find people who both were poorer than before the period observation and that would be deserving of liberal sympathy. It would be a little tough but I am confident it could be done.

So, the implication here is that when it comes to the unequal distribution or real economic growth you have to do two things:

A You have to slow down and make sure you understand what’s being said; it’s not always easy. Examples below.

B You have to decide whether the inequality being described is a moral problem for you or, otherwise a political issue. (I, for one, would not lose sleep over the increased poverty of the stock exchange players in my fictitious example above. As for the lady typists, I am sorry but I can’t be held responsible for people who live under a rock on purpose.)

Naively blatant misrepresentations

A hostile liberal commenter on this blog once said the following:

“Extreme poverty in the United States, meaning households living on less than $2 per day before government benefits, doubled from 1996 to 1.5 million households in 2011, including 2.8 million children.”

That was a rebuttal of my assertion that there had been general (average) income growth.

Two problems: first, I doubt there are any American “households” of more than one person that lives on less than $2 /day. If there were then, they must all be dead now, from starvation. I think someone stretched the truth a little by choosing a misleading word. Of maybe here is an explanation. The commenter’s alleged fact will provide it, I hope.

Second, and more importantly, as far as real income is concerned, government benefits (“welfare”) matter a great deal. Including food stamps, they can easily triple the pitiful amount of $2 a day mentioned. That would mean that a person (not a multiple person- household ) would live on $1080 a month. I doubt free medical care, available through Medicaid, is included in the $2/day. I wonder what else is included in “government benefits.”

The author of the statement above is trying to mislead us in a crude way. I would be eager to discuss the drawbacks of income received as benefits in- instead of income earned. As a conservative, I also prefer the second to the first. Yet, income is income whatever its source, including government benefits.

The $2/day mention is intended for our guts, not for our brains. Again, this is crude deception.

Pay attention to what the other guy asserts sincerely about economic growth.

Often, it implies pretty much the reverse of what he intends. In an October 2013 discussion on this blog about alleged increasing poverty in the US, asked the following rhetorical question:

“Or have Americans’ standard of living only improved as the gap [between other countries and the US] closed?“

I meant to smite the other guy because the American standard of living has only increased, in general, as we have seen (in Part One of this essay posted). A habitual liberal commenter on my blog had flung this in my face:

“….Since 1975, practically all the gains in household income have gone to the top 20% of households…” (posted 10/23/13)

(He means in the US. And that’s from a source I am not sure the commenter identified but I believe it exists.)

Now, suppose the statement is totally true. (It’s not; it ignores several things described in Part One.) The statement says that something like roughly 60 million Americans are richer than they, or their high income equivalents were in 1975. It also says that other households may have had almost stationary incomes (“practically”). The statement does not say in any way that anyone has a lower income in 1975. At best, the statement taken literally, should cause me to restate my position as follows:

“American standards of living have remained stationary or they have improved….”

You may not like the description of income gains in my translation of the liberal real statement above. It’s your choice. But the statement fails to invalidate my overall assertion: Americans’ standard of living improved between 1975 and 2007.

What the liberal commenter did is typical. Liberals always do it. They change the subject from economic improvement to something else they don’t name. I, for one, think they should be outed and forced to speak clearly about what they want to talk about.

Big fallacies in plain sight

Pay attention to seemingly straightforward, common liberal, statist assertions. They often conceal big fallacies, sometimes several fallacies at once.

Here is such an assertion that is double-wrong.

“In the past fifteen years the 20% of the population who receive the lowest income have seen their share of national income decrease by ten percentage points.” (Posted as a comment on my blog on 10/21/13)

Again, two – not merely one – strongly misleading things about this assertion. (The liberal commenter who sent it will assure us that he had no intention to mislead; that it’s the readers’ fault because, if…. Freaking reader!)

A The lowest 20% of the population of today are not the same as those of fifteen years ago, nor should you assume that they are their children. They may be but there is a great deal of vertical mobility in this country, up and down. (Just look at me!) The statement does not logically imply that any single, one recognizable group of social category became poorer in the interval. The statement in no way says that there are people in America who are poor and that those same people became poorer either relatively or in an absolute sense. Here is a example to think about: The month that I was finishing my doctoral program, I was easily among the 20% poorest in America. Hell, I probably qualified for the 5% poorest! Two months later, I had decisively left both groups behind; I probably immediately qualified for the top half of income earners. Yet, my progress would not have falsified the above statement. It’s misleading if you don’t think about it slowly, the way I just did.

I once tried to make the left-liberal vice-president of a Jesuit university understand this simple logical matter and I failed. He had a doctorate from a good university in other than theology. Bad mental habits are sticky.

B Percentages are routinely abused

There is yet another mislead in the single sentence above. Bear with me and ignore the first fallacy described above. The statement is intended to imply that the poorer became poorer. In reality, it implies nothing of the sort. Suppose that there are only two people: JD and my neighbor. I earn $40, neighbor earns $60. In total, we earn $100. Thus my share of our joint income is 40%, neighbor’s is 60%. Then neighbor goes into business for himself and his income shoots up to $140. Meanwhile, I get a raise and my income is now $60.

In the new situation, my share of our joint income has gone down to 30% (60/60+140), from 40%. (Is this correct? Yes, or No; decide now.) Yet, I have enjoyed a fifty percent raise in income. That’s a raise most unions would kill for. I am not poorer, I am much richer than I was before. Yet the statement we started with stands; it’s true. And it’s misleading unless you pay attention to percentages. Many people don’t. I think that perhaps few people do.

My liberal critic was perhaps under the impression that his statement could convince readers that some Americans had become poorer in spite of a general (average rise) in real American income. I just showed you that his statement logically implies no such thing at all. If he want to demonstrate that Americans, some Americans, have become poorer, he has to try something else. The question unavoidably arises: Why didn’t he do it?

Was he using his inadequate statement to change the subject without letting you know? If you find yourself fixating on the fact that my neighbor has become even richer than I did because he more than doubled his income, the critic succeeded in changing the subject. It means you are not concerned with income growth anymore but with something else, a separate issue. That other issue is income distribution. Keep in mind when you think of this new issue that, in my illustration of percentages above, I did become considerably richer.

Liberals love the topic of unequal progress for the following reason:

They fail to show that, contrary to their best wish, Americans have become poorer. They fail almost completely to show that some people have become absolutely poorer. They are left with their last-best. It’s not very risky because, as I have already stated, it’s almost always true: Some people have become not as richer as some other people who became richer!

Policy implications of mis-direction about income growth

The topic matter because, in the hands of modern liberals any level of income inequality can be used to call for government interventions in the economy that decrease individual liberty.

Here are a very few practical, policy consequences:

A Income re-distribution nearly always involves government action that is, force. (That’s what government does: It forces one to do what one wouldn’t do out of own inclination.) That’s true for democratic constitutional governments as well as it is for pure tyrannies. In most countries, to enact a program to distribute the fruits of economic growth more equally it to organize intimidation and, in the end, violence against a part of the population. (For a few exceptions, see my old but still current journal article: “The Distributive State in the World System.“ Google it.) This is a mild description pertaining to a world familiar to Americans. In the 1920s, in Russia, many people (“kulaks”) were murdered because they had two cows instead of one.

Conservatives tend to take seriously even moderate-seeming violations of individual liberty, including slow-moving ones.

B Conservatives generally believe that redistribution of income undermines future economic growth. With this belief, you have to decide between more equality or more income for all, or nearly all (see above) tomorrow?

It’s possible to favor one thing at the cost of bearing the travails the other brings. It’s possible to favor the first over the second. This choice is actually at the heart of the liberal/conservative split. It deserves to be discussed in its own right; “Do your prefer more prosperity or more equality?” The topic should not be swept under the rug or be made to masquerade as something else.

If you are going to die for a hill, make sure it’s the right hill.

PS: There is no “income gap.”