From AEI, another helpful corrective for the common claim that American incomes have stagnated, this…
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Image of the Day: Yes, Incomes Have Risen

From AEI, another helpful corrective for the common claim that American incomes have stagnated, this one incorporating the fact that the average size of households has declined over recent decades:

[caption id="" align="alignleft" width="1309"] Median Incomes[/caption]

 …[more]

September 20, 2019 • 09:16 am

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A Chance to Strike at the Heart of Crony Capitalism Print
By Troy Senik
Thursday, April 24 2014
Markets reward innovation and a favorable quality-to-cost ratio. Crony capitalism — government efforts to tilt markets in favor of preferred firms — reward political connections and lobbying money.

There’s a famous quote — one of those too good for anyone to have definitively sourced — in which Mahatma Gandhi, upon being asked what he thought of western civilization, supposedly responded, “I think it would be a good idea.”

The aphorism may be little more than the stuff of legend, but the same principle could apply if the question was about free-market capitalism in modern America. Anyone who wants to grapple with the topic has to reckon with the fact that, while the nation’s economy is still rooted in a basic respect for markets, government has all too often had its thumb on the scales in recent years — and what it has yielded is not anything that deserves the title “capitalism.”

Do we have a free market in energy, where the federal government subsidizes uncompetitive “green” fuels and seeks any means it can to delay or prevent the development of conventional resources like oil and coal? Do we have a free market in automobiles when Washington sweeps in to save a collapsing Detroit? Do we have a free market in finance in the wake of TARP and the Dodd-Frank law, which, if anything, fortifies the principle of “too big to fail?”

In the years since the financial crisis, thoughtful conservatives have recognized the increasing need to draw a distinction between being “pro-business” and “pro-markets.” Genuine free markets, after all, pay no mind to incumbent wealth or success. Market policies can’t be accurately described as “pro-business,” because some firms — those that can’t create a quality product at a reasonable price — inevitably fail if the market is left free to function. Those failures cause short-term pain, but also allow markets to get more efficient over time, maximizing overall wealth.

A pro-market approach to the auto industry, for instance, would have allowed General Motors to reorganize and live with the consequences of its poor decision-making rather than bailing the company out. A pro-market approach to healthcare reform would have knocked down barriers to patient choice rather than catering to the demands of the insurance industry. Markets reward innovation and a favorable quality-to-cost ratio. Crony capitalism — government efforts to tilt markets in favor of preferred firms — reward political connections and lobbying money.

If conservatives want to get serious about arresting this trend, they could find worse places to start than preventing the re-authorization of the Export-Import Bank, an institution that will see its charter expire in September. Begun through an executive order of Franklin D. Roosevelt (itself a surefire sign of trouble), the bank provides financing to overseas companies looking to purchase American goods. In other words, it’s a means by which the federal government greases the skids for major corporations looking to do business in foreign markets. In 2012, for instance, Boeing was the recipient of more than 80 percent of the bank’s loan portfolio.

Defenders of the bank argue that its loans and financial guarantees are low-risk (and thus don’t endanger taxpayers) and that it exists to provide financing in areas where private markets wouldn’t be up to the challenge. It’s a damning explanation, as the two rationales are mutually exclusive.

If the loans really are such surefire bets, there’s no reason that they couldn’t be provided by the private sector. Conversely, if it really would be difficult to secure the financing, that’s a signal that taxpayers are being asked to shoulder a liability that’s too high. For what it’s worth, the case seems to be more the former than the latter — the bank tends to generate a positive return to the Treasury, a sign that it’s simply subsidizing deals that would get done in the private sector at slightly higher rates.

Back during his 2008 presidential campaign — when he was still trying to convince voters that he was a different kind of Democrat — Barack Obama himself even denounced the Export-Import Bank as “little more than a fund for corporate welfare.” Reverting to type, however, he reauthorized it in 2012, increasing its lending limit by 40 percent. To their shame, a majority of congressional Republicans voted for the extension.

This time may be different. House Financial Services Committee Chairman Jeb Hensarling and House Budget Committee Chairman Paul Ryan are both reportedly encouraging their fellow Republicans to prevent the bank’s re-authorization. That’s precisely what they should do.

Republicans need to draw a contrast with Democrats — between a party that thinks the economy should reward hard work and productivity and one that thinks it should reward political connections and cronyism. If they don’t, they’ll be vulnerable to attacks that they’re only in favor of limited government when it’s convenient for their corporate allies.

Republicans don’t need to play the big government game. Democrats will beat them at it every time.

Question of the Week   
On September 17 of which one of the following years was the U.S. Constitution sent to Congress for ratification by the states?
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—Piers Morgan, Daily Mail
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