Tuesday, February 23, 2016

Strange bedfellows: Koch and Sanders

Here is a great article by Charles Koch, one of the “infamous” Koch brothers that liberals routinely demonize. Koch agrees with Sanders that Big Government has unfairly rigged the system in favor of powerful interests and against everyone else.

The senator is upset with a political and economic system that is often rigged to help the privileged few at the expense of everyone else, particularly the least advantaged. He believes that we have a two-tiered society that increasingly dooms millions of our fellow citizens to lives of poverty and hopelessness. He thinks many corporations seek and benefit from corporate welfare while ordinary citizens are denied opportunities and a level playing field.

I agree with him. 
Democrats and Republicans have too often favored policies and regulations that pick winners and losers. This helps perpetuate a cycle of control, dependency, cronyism and poverty in the United States. These are complicated issues, but it’s not enough to say that government alone is to blame. Large portions of the business community have actively pushed for these policies.
Our criminal justice system, which is in dire need of reform, is another issue where the senator share some of my concerns. Families and entire communities are being ripped apart by laws that unjustly destroy the lives of low-level and nonviolent offenders.

Today, if you’re poor and get caught possessing and selling pot, you could end up in jail. Your conviction will hold you back from many opportunities in life. However, if you are well-connected and have ample financial resources, the rules change dramatically. Where is the justice in that?

Read the whole thing. These are important issues that transcend party lines.


Lawyer in NJ said...

Although I loathe the majority of political positions of both Sanders and Koch, it does underscore a point I have made repeatedly: enduring and effective beneficial change cannot be accomplished in the absence of consensus.

The money in politics issue will never find that type of consensus, but the criminal justice issue might.

An initial step would be to understand that prison is not an effective place to treat or dissuade mere drug users.

Scott Grannis said...

Lawyer: I would argue that what we need is a leader who can forge a consensus that leads to enduring and beneficial change. I think Koch is saying that himself near the end of the article. Without the right leader, we won't get the consensus.

And of course the "money in politics" issue is not about money, it's about there being too much government for sale.

marcusbalbus said...


Johnny Bee Dawg said...

If We The People insisted that the US Government be held to its Constitutional bounds, none of this injustice that Koch describes could occur. Redistributive policies of are not permitted in the enumerated powers of the government. Government takeover of healthcare is not permitted, no matter how many crooked Supreme Court Justices are bought to say so. Lawlessness is rampant. Lets see if we vote for more of the same.

Rob said...

Scott, I don't recall hearing you address these kind of "social" issues before. Obviously I can see you are touching on it here because an "arch capitalist" like Koch has done so. I also find your comment above about there being "too much government for sale" to be very interesting. I wonder if you could perhaps write more on this area because I have many "liberal"-minded American friends for whom the American dream is broken (and quite some time ago too). Figures show that average US incomes have stagnated for decades, contributing to the decline of what was the world's greatest middle class.

You area a persuasive and passionate advocate of smaller government and lower taxes. You have shown many times that the US economy is not quite as broken as many say it is. But what do you think about this decline of the middle classes and the apparent growth of inequality ? To me, it is largely the price to be paid for globalisation and the period of adjustment to a "flatter world".

So what do you think Scott ? Is something broken that can't be easily fixed ?

Thanks for your thoughts.

Scott Grannis said...

Rob: Government policies designed to reduce the "inequality" gap between rich and poor will inevitably just make things worse. We've had decades of "progressive" fiscal policy designed to redistribute income by a variety of means (progressive taxation, welfare) and it hasn't worked. We've had decades of fiscal policies designed to "stimulate" the economy (deficit spending) that have only weakened the economy. Along the way, free markets have been blamed for the failure of these policies to achieve their goals. But free markets only fail when they are not allowed to function. Too much government intervention in the economy is the problem, not too much free market capitalism.

If there is one lesson we should all learn from this it is that government interference in free markets almost always yields perverse results. That's why the goal today should be to shrink government, and the Koch brothers are exactly right on this. I should add that they have been important supporters of the Cato Institute, which I consider to be the premier libertarian think tank and defender of personal liberty, free markets, and limited government.

Cato's website (cato.org) provides a wealth of knowledge for those who believe in these principles.

Lawyer in NJ said...


Let's assume you're right about leadership. Who is that person question? I would argue Bloomberg, but I am skeptical that a third-party candidate can win.

Scott Grannis said...

I think that the Republican Party has a small but growing cadre of young and up-and-coming politicians who understand the importance of limited government, personal liberty and free markets. Cruz and Rubio figure among these, but I think Cruz is the one most likely to defend these principles. Trump at times appears to understand, but at other times (eg his opposition to free trade) fails miserably. I think Charles Koch would agree that none of the current candidates stands out as a shining star in this regard. Bloomberg has proven to be an effective administrator, but his love of nanny-state policies (eg., limiting soda drink sizes and his advocacy of gun control) are troubling.

Lawyer in NJ said...

What you would call in nanny state, I would call a safety net. Can programs be done more cost-effectively with incentives for those who have the ability to improve their lives? Of course. But some people, whether through luck or some other factor, will need some very basic level of assistance.

Let's look at healthcare. Hospitals treat sick people without insurance in emergency rooms. That cost is passed on to the rest of us. That's why the Heritage Foundation came up with the individual mandate and premium support.

When done right, it saves money.

Again I'm all for lower taxes, especially corporate taxes, but neither side has a monopoly on solutions.

Lawyer in NJ said...

As for Rubio, Christie exposed his unpreparedness decisively and completely. Cruz is much too theocratic for me.

Scott Grannis said...

There is always a need for helping society's unfortunates. But I would argue that government should never take on that role. It is best left to private charities. Governments just don't have the right incentives to provide charity on a massive scale. Private charities are far more likely to provide needed assistance in a cost-effective fashion.

Benjamin Cole said...

Agreed. But keep in mind in the next 10 years the US government will extract $10 trillion from income-and capital-gains taxpayers, and redistribute it to the national security complex--- the DoD, the DHS, the VA, black budget, and prorated debt. Cato says cut such spending half, but our Founding Fathers would cut much deeper.

Not only that, rural America is heavily subsidized, from roads to water systems to power systems to telephone systems to airports to mail delivery and so forth.

And what can be done about ubiquitous property zoning--- everyone in America becomes a greenie socialist when it comes to their own neighborhood.

I see no bravery in the American right when it comes to tackling the issues I have just mentioned.

A highly judicious definition of "socialism" is used on the American right. BTW, the VA operates a communist healthcare system. It is health care for former federal employees provided in federal facilities by federal staff financed by federal tax payers.

Distilled communism!

Benjamin Cole said...

OT but curious: No autopsy on Scalia? He is healthy enough to fly across country and hunt birds outdoors, but when he dies he becomes a frail as tissue paper in a hurricane.

Not only no autopsy, not even a medical examination. He was pronounced dead of natural causes by a judge...who received an account by telephone. Somehow the local sheriff determined Scalia died of a heart attack.

So, they are sure no one poisoned Scalia's drink at the wealthy hunting club? How are they so sure? Some people might have a stake in pending Supreme Court votes. Or maybe there is a sicko-liberal on country club staff. It doesn't sound like Scalia cooked his own beans and BYOB by a campfire.

The "no autopsy" leads me to believe Scalia was probably legally drunk, and handlers did not want that fact to come out, which would not reflect well on the Scalia legacy, although there is no harm in having drinks at a resort (no driving). At 79 did he have companionship? Who knows.

Still, to not perform an autopsy speaks poorly of everyone involved.

Grechster said...

Benjamin: You are so right about this. It should be automatic in this circumstance. Any request to NOT perform an autopsy based on protecting his legacy from possible drunkenness or, uh, companionship should be easily brushed aside based on the loftiness of his position.

Johnny Bee Dawg said...

It's unthinkable to me that there was no investigation of his death, particularly since the leader of the group, and host of the event who reportedly found his body, was a large DEM donor who has met with Obama at least twice at the White House. Appearance of impropriety, at the very least.

This exclusive European Royalty hunting group that Scalia died among had their US charter established in the 1960s at the all-male Bohemian Club in San Francisco...one of the creepiest "gentlemen's clubs" in the country for the last 140 years, in part because of their summer retreats at the Grove.

Old time Bohemian Grove:

Of course the Scalia family insisted there be no autopsy.

Hans said...

This is very disconcerting. Without serious changes
the beat will go on.


Scott Grannis said...

As a reminder, what's needed to boost growth are better incentives, not easier money. Increase the incentive to work and invest by lowering tax rates. Reduce the burdens of regulation (it's difficult to start a new business).

John A said...

Focusing just on GDP growth ignores the reality that US population isn't growing as fast as it used to, and has been slowing down for some while. On a per-capita basis, real GDP continues to rise ever upward and is at new records:

Given that the population is aging and more people are in retirement, if we look at GDP per worker the picture looks even better. In fact its rising as fast as it did in the 80's and 90's:

Scott Grannis said...

John A: I don't think the numbers support your conclusions. For one, the labor force is not a measure of the number of people working; it is the number working plus the number who would like to work but don't have s job. Second, on a per capita basis, real gdp has hardly increased at all since the end of 2007. The chart you created shows that gdp per capita has never experienced such slow growth over an 8 year period.

What you really need to do is look at productivity, which is a measure of increased output per worker. Productivity is the source of all advancement in living standards. It has bene historically weak for the past 5 years. I discussed this in a feb 4th post:


honestcreditguy said...

If there is one lesson we should all learn from this it is that government interference in free markets almost always yields perverse results

So what did we get with banks, insurance companies, Lenders and Auto companies getting rescued from their stupid mistakes and gambling? It's called no yield for savers, the prudent, the non credit criminals, debt junkies?

Govt. interference let the rich pigmen get richer. Rewarded the same speculators with bulk purchases of homes they pushed to the folks that couldn't afford them. The FED, Govt and Treasury is an enemy of financial freedom. The real axis of evil.

Pigmen bankers are just that, feeding at the trough of the innocent and beaten...When bankers are reigned in the world will be a better place..

Madison, Jefferson and so many more were right...

John A said...


Real GDP per capita has not increased much since 2007 because we had a steep recession right after 2007. It *has* increased substantially since the nadir of the recession in 2009. If it had been a mild recession as in 1990 and 2001, we'd be a lot farther along than we are now, but unfortunately the Great Recession had other plans.

As for the labor force, your comment on definitions is noted. However, if we instead look at real GDP per employed person the picture doesn't look much different. The upward slope of the line isn't much different than it was in the 80's:

There are problems with measuring productivity which have likely been exacerbated recently due to technological changes. Brian Wesbury, for one, has been very good at pointing these out. For example:

Scott Grannis said...

John A: use a log scale for the y-axis of first chart and you will see that the rate of growth of GDP per capita in the past 5 years is about as slow as it has ever been. It will be similar to the rate of growth of productivity, since the two are closely related. It is likely that productivity has been underestimated for the reasons the Wesbury cites. But I would argue that it is difficult to dismiss the GDP statistics outright. Things may not be quite as bad as the productivity numbers suggest, but neither can it be said that the economy has progressed anywhere near as much in the current expansion as it has in the past.

This remains the slowest recovery in modern times. I don't believe it's a coincidence that this recovery has also been accompanied by huge increases in deficit-financed "stimulus" spending, huge and arguably unprecedented increases in regulatory burdens (Dodd-Frank and Obamacare), among other burdens imposed by the current administration, and rising marginal tax rates, the burden of which has fallen mostly on the shoulders of the middle class.

Benjamin Cole said...

Don't forget increasingly strict and nearly hysterical property zoning on the part of most municipalities. Try building anything in Newport Beach, California.

Hans said...

Ben Jamin, I pleased that at least you are one in the know.

The Permission Commissions controls ALL BUILDING within the
boundary of the city. Size, shape, material, height, types of
business, water control, sidewalks, parking capacity, blue print
approval, etc.

I am sure there is plenty more that I did not add. America no longer
has city councils but rather social councils on the same order as in
WDC and state government units.

America is turning into a very large cesspool..

Benjamin Cole said...


In 1926 the Supreme Court ruled in favor of city property zoning.

Today the GOP and the Donks are united in their support of property zoning, the result of which is increasing housing scarcity.

Nobody wants a 50-story condo in their socially regulated single-family detached neighborhood.

As my uncle Jerry says, "Everyone is a pinko greenie in their own neighborhood."

Bob said...

Lawyer; Safety nets are fine and a positive reflection of an enlightened society. The problem is we don't have a safety net, we have a solid platform. This is the inevitability of government programs, a good altruistic start that turns into a bureaucracy that becomes more interested in its existence and survival than it does in helping the citizens it was created to help.