Wednesday, 16 December 2015 12:07

Hendrickson's View

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Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

Lee Kuan Yew (1923-2015)

Singapore's Lee Kuan Yew quietly passed from this world from pneumonia on March 23 at the age of 91. Lee's vision and leadership (both officially as Prime Minister from 1959 to 1990, then unofficially behind the scenes) guided Singapore's transition from an impoverished Third World backwater to a gleaming modern affluent city-state. Indeed, no other person on earth has come close to matching the economic miracle that Lee wrought in Singapore, where per capita GDP has risen from around $400 in 1960 to over $56,000 today with an unemployment rate under two percent.

Mr. Lee was brilliant. A masterful communicator in three languages - Mandarin, Malay, and English - I loved to read his column in Forbes Magazine, written from 2001 until recently. It was filled with an impressive mixture of wisdom, extensive knowledge, and a keen understanding of the complexity of issues. Lee was an admirable combination of enlightened visionary and hardheaded realist.

A political pragmatist, Lee made common cause with Communist trade unionists to form the People's Action Party in 1954, guiding it to victory in 1959. Lee and his party gained independence from Great Britain in 1963, then, after two years in an uncomfortable federation with Malaysia, Singapore launched out on its own in 1965 and flourished.

We can see Lee's vision, wisdom, and brilliance in the course he charted for Singapore. He started by making English the official language while not suppressing either Chinese or Malay identities, thereby bringing a cohesion to Singapore's polyglot, multi-ethnic society. At a time when other newly independent colonies of various European powers succumbed to the European intellectual virus of socialism and devastated their populations with socialistic policies, Lee charted a course on the road less traveled. He purged the Communists from his party and implemented free-market policies that produced the world's greatest economic miracle of the past half-century. Singapore consistently ranks with Hong Kong as the two freest economies in the world, both in the Heritage Foundation's Index of Economic Freedom and the Cato and Fraser Institute's Economic Freedom of the World Report. Doingbusiness.org ranks Singapore number one in the world for ease of doing business. Michigan State University's Global Edge website states, "Singapore has been ranked as having the most open, least corrupt, and most pro-business economy in the world." In fact, to Lee's lasting credit and our discredit, over the past 50 years Lee did a much better job of protecting Singaporeans' property rights than the U.S. government has done of protecting Americans' property rights - a fact that largely explains Singapore's faster rate of economic progress over that time span.

So effective were Lee's policies, right from the start, that China's leader Deng Xiaoping, after visiting Singapore in 1978, sent 22,000 Chinese officials to Singapore to study Lee's policies. Showing his ability to see the big picture, Lee believed that the U.S. involvement in Vietnam (which Lee supported consistently), though perceived as a defeat here at home, was hugely beneficial for Asia and ultimately for the world. It bought time for Singapore to develop along free market lines, which in turn convinced Deng to implement the many economic reforms that have enabled hundreds of millions of Chinese to climb out of poverty - an example that later induced Vietnam to turn its back on doctrinaire socialism and unleash its people's productive energies.

As a pragmatist, he understood that the only way Singapore could get on the fast track to economic development would be if it could avoid the common Third World problems of official corruption and ambitious individuals using government to enrich themselves at the expense of the people. So, he adopted authoritarian tactics to suppress the centrifugal forces inherent in a multi-ethnic, multi-cultural polyglot society with the usual share of political ideologues. He imposed order heavily enough to contain disruptive, divisive forces, but light enough for the people to prosper. The formula worked spectacularly. Lee's vision and leadership turned Singapore into a beautiful, gleaming, clean, wealthy city-state with one of the lowest crimes rates and highest standards of living in the world.

Naturally, Lee's authoritarianism offended those who were its targets. While pragmatic Communists like Deng admired and sought to learn from Lee, ideologically rigid Communisms detested him. And why not? He put the socialist models of Castro, Kim, Mao, et al., to shame. The Marxists always have trumpeted Jeremy Bentham's utilitarian tenet "the greatest good for the greatest number" as a prime directive, but Lee's Singapore, not the Communists' fraudulent and failed "workers' paradises," actually attained that goal. Lee brought breath-taking prosperity with breath-taking rapidity to his people whereas the Communists brought wretched poverty, and Lee did it without resorting to the draconian brutalities inflicted by Communists - extensive networks of slave labor camps, torture factories, summary executions etc. Lee once said that his greatest achievement was "beating them" - meaning, Communists.

Mr. Lee would be the first one to admit he wasn't perfect and that his pragmatic utilitarian policies were far from ideal and sometimes unjust. "I had to do some nasty things, locking fellows up without trial," Lee told a New York Times interviewer in September 2010. "I'm not saying everything I did was right. But everything I did was for an honorable purpose." It's hard to picture such candor and humility from Castro, Kim, or any dictator on the left.

Mr. Lee did not build a personality cult around himself. He could have continued as Prime Minister indefinitely, but he withdrew in 1990, handing over the reins of government to a younger generation while continuing to offer guidance from the advisory position of Minister Mentor until his retirement in 2011. When he died, he was mourned as a man, a social benefactor, a true friend of the people. What a welcome contrast from the state funerals of deceased Communist tyrants with their obligatory homage to rulers that demanded to be worshiped as fearsome pagan deities - angry gods who had degraded and oppressed the poor, suffering masses programmed to publicly mourn the passing of their own tormentors.

There are no saints in politics, and there is no perfect government on earth, but Lee Kuan Yew did much good. He uplifted his people and showed the world convincingly which policies bring prosperity. He deserves to be remembered as one of the world's greatest 20th-century leaders. R.I.P.

Is Obama to Blame for Weak Economic Growth?

A political science colleague sent me an article documenting President Obama's dismal economic record, and he asked me for added details and perspective. Here goes:

True, economic growth under Obama has been sluggish, fitful, faltering, historically weak, etc. However, U.S. economic growth has been trending downward for several decades. Conclusion: Our economic woes did not begin with Barack Obama. However, he has done nothing to reverse the trend; on the contrary, he has doubled down on the very policies that have hampered economic growth. For that he bears full responsibility.

The headwinds opposing economic growth are generated by what Ronald Reagan referred to as "the government disease." No president has advocated, championed, and imposed more harmful government intervention than Barack Obama.

Here's a short list of those interventions:

1.) Government spending. Economists as far back as Adam Smith have noted that the true burden of government is what it spends, not what it taxes. When political decisions about where to allocate scarce economic resources supplant market decisions, production inevitably is diverted from the most highly valued needs to less-valued things. Thus, less wealth is produced, economic growth is suboptimal, and the people are poorer than they otherwise would be.

While not having increased federal spending by as large a percentage as his predecessor (although not because he didn't want to, but because a Republican Congress has thwarted that goal) Obama undeniably has presided over more market-distorting government spending that any of his predecessors. To be fair, some of this spending was already baked into the cake - particularly the rising spending on Social Security and Medicare. Because federal entitlements operate on a "pay as you go" basis, these increasing expenditures to seniors do not consist of real economic returns on capital invested. Instead they transfer hundreds of billions of dollars from current workers to mostly retirees. Entitlement expenditures artificially inflate GDP and overstate the real wealth of the country, because those dollars represent purchasing power that does not arise from the production of actual goods or services.

2.) Rising debt. The greater the debt load, the more present income is diverted from present consumption to pay for past consumption. After a brief downturn following the 2008-9 financial crisis, total debt has risen by over 15 percent to a shade over $59 trillion, according to the Federal Reserve. Over half of the $7.35 trillion increase (some $4.84 trillion) is government debt stemming from Obama's budgets.

Obama's policy of encouraging and facilitating loans to college students has seen student debt soar to over $1 trillion with devastating economic consequences for the recipients. Young graduates struggling under the burden of debt have delayed marriage, child-bearing, home-buying, etc. In too many cases, college debt has stunted young American lives.

3.) Suffocating regulation. The Obama administration has burdened Americans with a record amount of federal regulation as measured by the number of new rules promulgated and pages in the Federal Register. The annual cost of the federal regulatory burden is now approximately $1.9 trillion (only nine countries' GDPs are larger). As reported in Investor's Business Daily, "the cost of enforcing federal economic regulations is . . . up 31 percent since Obama took office, and the 'Code of Federal Regulations' is 17,294 pages longer."

Furthermore, as noted by Obama's Council on Jobs and Competitiveness, the Sarbanes-Oxley law (which Obama inherited, but has not revised) and Dodd-Frank (which a Democratic Congress passed in 2010 with Obama's approval) have "placed significant burdens on the large number of small companies." Consequently, we are in the unusual and worrisome situation of businesses closing at a faster rate than they are opening, thereby shrinking employment opportunities and slowing economic growth.

4.) Tax policy. Business tax rates have remained unchanged under Obama, and that has had negative consequences in a world that has been shifting toward lower corporate profits taxes. By allowing the United States to have the highest corporate tax rate in the developed world, American businesses are migrating abroad via the corporate inversion maneuver.

5.) The war on work. While constantly professing concern for workers, Obama has consistently supported and implemented policies - raging from a higher minimum wage to federal jobs programs to anti-business policies - that have shrunk the number of jobs (see the Labor Force Participation Rate). Obama's prize legislative achievement, the Affordable Care Act, has shrunk the number of hours worked (and consequently the amount of wealth created) by incentivizing employers to reduce the number of full-time jobs. According to David Stockman, the United States has two million fewer full-time workers now than it did in 2007.

Bottom line: President Obama's policies have crippled the American economy. *

Read 831 times Last modified on Wednesday, 16 December 2015 18:07
Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and Forbes.com.

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