Tuesday, January 23, 2007

On "Greed" and Economic Success

Two articles drew my attention today. First one is Thomas Sewell's The “Greed” Fallacy which counters the Marxist-inspired viewpoint that equivalates business success with greed. It explains that the labor market for CEO's is what's driving compensations so high (to the outrage of the socialists). And in the end he turns to oil prices: Every time oil prices shoot up, there are cries of “greed” and demands by politicians for an investigation of collusion by Big Oil. Now that oil prices have dropped big time, does that mean that oil companies have lost their “greed”? Or could it all be supply and demand — a cause and effect explanation that seems to be harder for some people to understand than emotions like “greed”?

In An Excellent Economic State of the Union, Larry Kudlow tries to point out something that the media is struggling to avoid: that the economy is doing exceptionally well. Jobs continue to boom. So do real incomes, productivity, and profits. Economist Michael Darda points out that real wages over the first five years of the Bush expansion are actually growing more rapidly than over the first five years of the Papa Bush/Bill Clinton boom. Meanwhile, unemployment today is only 4.5 percent. Federal, state, and local tax collections are soaring through the roof. Budget deficits are plunging. Inflation-adjusted GDP is averaging just more than 3 percent. Family wealth stands at a record of slightly more than $54 trillion. Total employment is at a record 146 million.

Then, defying the liberal dreams that America doens't matter in the world anymore, he says that in fact, this America boom is spearheading a global economic surge. While the American free-market model is often derided as “cowboy capitalism,” imitation remains the sincerest form of flattery. And it isn’t just China, India, and Russia who are acquiescing to the worldwide spread of American capitalism. It’s also Eastern Europe and parts of South America. Heck, even the socialists in Old Europe — like France and Germany — are getting into the act by reducing individual and corporate tax rates to promote growth. Mr. Kudlow takes on Kyoto as well: As for the global-warming alarmists, imposing carbon caps or carbon taxes won’t do anyone any good. On the economic side of things, this will severely depress production and employment. And for what? An estimated global temperature reduction of 4/100ths of 1 degree Fahrenheit?

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