Archive for the ‘Thomas Sowell’ Category

Thomas Sowell, senior fellow of the Hoover Institution, argues that the Affordable Care Act (Obamacare) is just an old program:

An Old ‘New’ Program

What is older than the idea that some exalted elite know what is good for us better than we know ourselves?

Insurance is an institution for dealing with risks. It is a costly and counterproductive way to pay for things that are not risks […] Your annual checkup does not cost any less because it is covered by insurance.

Sowell also points out that Obamacare was initially supported by the idea to help the minority of people lacking health insurance. But instead of directly helping those people, the new health care policy now affects everyone.

Since there has never been a society of human beings without at least some segment with some problem, this is a formula for a never-ending expansion of government power.

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Thomas Sowell, senior fellow at the Hoover Institution, on the use of words in politics:

Words That Replace Thought

At neither end of the income scale is a “fair share” defined as a particular number or proportion, or in any other concrete way. It is just a political synonym for “more,” dressed up in moralistic-sounding rhetoric.

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It is often said that the welfare state would work in theory but fails in practice. Here is Thomas Sowell‘s response:

You mean separating the hopes from the reality.

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Words are probably the most important tools that politicians can use. Indeed, rhetoric is far more important in becoming a ‘successful’ politician than actual knowledge. More than a year ago, I found this wonderful sentence that ‘style often outweighs substance’ in political debates. It is basically a summary of decades of failed political crusades.

Thomas Sowell has followed and commentated on these crusades. He describes the sharp difference between words and realities in one of his articles on blacks and the housing market:

Misleading Words

It was one of the most valuable lessons, that words do not necessarily reflect reality.

Now the statistics tell us, belatedly, that blacks lost out, big time, from this “favor” done for them by politicians.

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The other day I came across yet another great quote by Thomas Sowell:

I don’t want people making decisions who don’t pay the price of their decisions. And that’s what politics is all about: you don’t pay the price of the decisions.

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For Uncommon Knowledge, Peter Robinson and economist Thomas Sowell discuss the nexus between culture and economic outcomes. The discussion is based on Sowell’s latest book “Intellectuals and Race”.

Multiculturalism is an insistence that the particular cultures found among less fortunate groups are not to be blamed for disparities in income, education, or crime rates but are on net positive.

This quotation reminds me of another sentence by Thomas Sowell that I posted about a year ago (link):

Although intellectuals pay a lot of attention to inequality among different groups, seldom has this attention been directed toward how the less economically successful might improve themselves by availing themselves of the culture of others around them.

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Dr. Thomas Sowell describes how private enterprises invest in politicians and why that leads to mutual benefits at the taxpayer’s cost:

An industry like the sugar industry can contribute money to Congress and the Congress will appropriate enough money to the sugar industry in subsidies to pay them back a thousand dollars on every dollar. And you cannot get that kind of return on your investment in many places.

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About a year ago, Dr. Thomas Sowell discussed the role of the Tea Party. In this interview he also talked about his book ‘Basic Economics‘ and the economics profession:

One of the sad things about the economics profession is that you have excellent people at the top but very little of that ever gets down to the actual public. Or even to the politicians, not that they would care that much.

In the second part of the interview, he dissects the impact of stimulus spending:

I am amazed that no one looks at the track record of what actually happens if you do nothing as compared to when the government intervenes.

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Anyone interested in learning more about the economics of Marxism might refer to a book published by Thomas Sowell back in 1985, called ‘Marxism: Philosophy and Economics‘.

In her review, Diana Hsieh discusses the main aspects of the book. As she points out, Marx’s crucial concept of “surplus value” was insinuated rather than explicitly established, either logically or empirically. Surplus value is simply defined as an “increment or excess over the original value” invested in production. And Marx quickly assumed labor to be the (only) factor responsible for this increment in value or of output. As Sowell notes:

It was an assumption deeply embedded in classical economics… [an assumption] devastated by the new conceptions and analyses introduced by neo-classical economics.

As a theoretical system, Marxian economics begins the story of production in the middle–with firms, capital, and management already in existence somehow, and needing only the addition of labor to get production started. From that point on, output is a function of labor input, given all the other factors somehow already assembled, coordinated, and directed toward a particular economic purpose.

[However,] once output is seen as a function of numerous inputs, and the inputs are supplied by more than one class of people, the notion that surplus value arises from [the] labor [of the proletariat] becomes plainly arbitrary and unsupported.

With his definition of surplus value, however, Marx completely neglects the roles of knowledge and risk in an economy: Since there are also failing firms which also hired workers, we see that there is no guarantee of receiving surplus value after hiring workers.

Sowell proceeds and explains how Marxism has been put into practice:

When economic incentives were drastically reduced or abolished in the heady egalitarian period following the Bolshevik revolution, the Soviet economy ground to a halt. Widespread hunger and a halt to vital services forced Lenin to resort to his “New Economic Policy” that restored the hated capitalist practices.

The later nationalizing of all industry under Stalin and his successors did not restore egalitarianism. Quite the contrary. There were highly unequal rewards to management, including whole systems of special privilege stores to which ordinary Soviet workers [had] no access.

This recognition of the fundamental failure of Marxian economics has later been described as

…mere betrayals of Marxist ideals, missing the more fundamental point that a crucial false assumption must be corrected in practice if people are to survive.

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Often statistics is used in the media with the intention to emphasize some disparity. And whenever the topic is wages, the distinction between disparity and inequality becomes blurred. Economist Thomas Sowell describes the absurdity of this perspective:

Nowhere in the world do you find this evenness that people use as a norm. And I find it fascinating that they will hold up as a norm something that has never been seen on this planet and regard as an anomaly something that is seen in country after country.

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