Uncommon Knowledge

Thoughts on the welfare state and the British underclass

Uncommon Knowledge

Postby Podori » 25 Sep 2012, 00:47

In this edition of Uncommon Knowledge, economist Thomas Sowell refers to Theodore Dalrymple's writings in his discussion of the welfare state.

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Re: Uncommon Knowledge

Postby Michael » 25 Sep 2012, 15:08

Thanks for posting that Podori. I really like Thomas Sowell. Many good points well said, but my favourite one was this:

SOWELL: "And if, by some miracle, we have the good sense to remove this president the question is will we have learned a lesson or will we turn off our common sense when there is the first woman president, the first Asian president, the first Latin president. Are we so hung up on symbolism that we don't understand that being President of the United States means having the lives of 300 million people in your hands, and the lives of people yet unborn?"

When I saw how much enthusiasm was gathering around the fact that Barack Obama was black, I was greatly disheartened, as it indicated to me that Americans were no longer even pretending to be rationalists, being more interested in the value of a symbol than in the proven qualities of a prospective leader or their policies.

I also enjoyed this exchange:

ROBINSON: "You read some people and they say it's the free market, it's capitalism, that tends to dissolve the values that make capitalism possible in the first place."

SOWELL (laughing): "It's wonderful how long it took capitalism to have that effect, and it only had that effect after the welfare state came in. It was the same way on both sides of the Atlantic."

Right after this Sowell discusses Dalrymple's writings about the underclass of England, which Sowell says sound just like the ghettos of the United States, when none of the conditions of race or history prevail, but the welfare state is the same.

I recommend everyone read Sowell's essay at the end, where he skewers the Democrat and progressive caricatures (they don't even deserve to be called "criticisms") of tax rate reductions as a means to economic growth. I had always thought there was something wrong with such caricatures, but till I read Sowell I could not place my finger on it. Sowell lays out very clearly the real issue: rich people are quite good at not paying taxes and keeping their money in tax free bonds and other financial instruments which do next to nothing for the health of their country's economy. When tax rates are decreased, there is additional incentive to invest, because what return there is on those investments will be proportionately greater, as less money is taken by taxes. At the same time, overall tax returns can rise, as rising incomes due to investments (and the hiring of people to expand businesses) create a larger pool of funds which can be taxed directly.
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