More econ.

From the WSJ, letters to the editor:

I think the answer to Alan Reynolds's excellent question and article ("How's Obama Going to Raise $4.3 Trillion?," op-ed, Oct. 24) is that Barack Obama is not going to raise $4.3 trillion, and he is not going to perform on his rhetoric. He excels as a rhetorician -- common to both the great and the least of past presidents -- but performance cannot run on that fuel. Inevitably, I think his luster will fade even with his most ardent supporters as that reality sets in. We also have seen luster fade time after time with Republican presidents. The rhetoric of a smaller and less invasive government always leads to king-size performance disappointments. This weakness is as central to the reality of our political economy as are its strengths. With all its foibles, its strengths become transparent when you compare it, not with our various idealizations, but with the litter of human experiments in political economy that have delivered far more suffering and murder than human betterment to the citizens of those economies.

Of course it is entirely likely that Mr. Obama will succeed in going for higher business, capital gains and income taxes, but it is an economic illusion to think for a minute that this will benefit the poor. All our wars on poverty have been lost by failing to help the poor help themselves. Higher business taxes, which ultimately can only be paid by individuals anyway, will simply export more economic activity to the world economy. Higher capital gains and income taxes will primarily reduce savings and investment at the expense of greater future productivity, which is at the heart of cross-generational reductions in poverty. A dozen countries, including the third largest economy, already have zero taxes on capital gains, and eight of them score high on the Economic Freedom Index and high in gross domestic product per capita.

As I raised in my Vote for John McCain posting, over 20 years of economic growth, study, and experience is on the verge of being wiped-out with an Obama election. Reinstituting FDR's policies of massive government spending, raising taxes and raising trade barriers has been shown to be colossal failures, yet Obama has campaigned on a message of recreating the worst aspects of the New Deal. Taxing the rich, raising trade barriers and increasing government hand-outs does nothing to drive people to create, to produce or to flourish; rather, it encourages people to cut-back, relax and open their government check every week.

As for Obama's promise to "spread the wealth" via government handouts and social programs, it is useful to look back at one president who understood the limits imposed upon the Federal government by the Constitution: President Grover Cleveland. In 1887, President Cleveland wrote the following in a statement vetoing $100,000 that would purchase seed for farmers in Texas suffering through a drought-

I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that though the people support the Government the Government should not support the people.

The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.

Once upon a time, receiving a government hand-out was something one did not admit for it showed a failure upon the individual; now, though, receiving a government hand-out is no longer frowned upon, rather, it's expected. This year simply magnifies that fact. Free markets are characterized by ups and downs, the one means by which the Federal government can and should regulate those ups and downs is through monetary policy, i.e., interest rates and injecting capital. However, when government intervenes outside of monetary policy, havoc can be created; of which the source of our most recent economic troubles is but one example. Other examples are such things as increasing taxes and implementing protectionist foreign trade policies, especially in times of economic difficulties, which are two things being proposed by Obama.

I plan only one more post about the current presidential election, which I do hope to get out sometime today, unless something very noteworthy pops across my screen.