Low Taxes Do What? [WSJ:Sowell]

Wall Street Journal ^ | Feb 24, 2004 | Thomas Sowell

[The Raven]

Some years ago, the distinguished international-trade economist Jagdish Bhagwati was visiting Cornell University, giving a lecture to graduate students during the day and debating Ralph Nader on free trade that evening. During his lecture, Prof. Bhagwati asked how many of the graduate students would be attending that evening's debate. Not one hand went up.

[Stallone]

Absolutely.

Exactly contrary to what the Socialist 'Rats preach to the too-stupid-to-vote cohort, high taxes actually protect the status quo, and don't do anything for the poor.

The rise up from any economic level is resisted by high taxes. What took 5 years will take 50.

For example, rich landlords don't lose their properties to the middle class. The middle class can't save enough money in a lifetime to invest under high taxes.

The rich stay rich, the poor stay poor.

The government eventually spends its confiscated money, and the very rich often develop cosy relationships with the government - and get even richer!

Soros, Buffet and Gates have every interest in protecting their empire from competition and extorting money from the people through their government proxy.

High taxes absolutely guarantees it.

[P.O.E.]

You said it better than I ever could've.

[Nick Danger]

shouldn't [Sowell] supply some statistics (data) along with this statement? Like how many jobs were created as a result of NAFTA and how many were lost as a result of NAFTA?

That sounds like one of those questions that the press throws at Rumsfeld during Pentagon press briefings. To which Rumsfeld always answers, "That is unknowable."

You don't have those statistics either, because nobody does. It would be impossible to ever figure out. The best anyone can do, which is what Sowell does, is to state conditions before and after NAFTA was passed. To go through every hiring and firing decision made in the last N years, determining for each one whether it was motivated or caused in some way by NAFTA, is an exercise in futility. You would literally have to be God to do that task, because you have to actually know about all the hiring and firing decisions that went on (which no one does), plus be able to read minds and follow chains of indirection that might go through 50 firms before a relation to NAFTA could be found.

Asking for data that is impossible to acquire is a cheap rhetorical trick, and nothing else.

Then we have the known unknowns.

[templar]

It would be impossible to ever figure out. The best anyone can do, which is what Sowell does, is to state conditions before and after NAFTA was passed.

Perhaps the trade surplus growth with Mexico before and after NAFTA would be a good indcator? I would think Sowell would be gleefully offering that as an indication his is right.

Asking for data that is impossible to acquire is a cheap rhetorical trick, and nothing else.

Not at all. It is asking that what is being stated in a manner implying it is a fact be shown that it is indeed fact, not just conjecture or opinion on the part of the author. If what he is claiming in this article is truth, the data would have to be available. Would you let an author of the opposite opinion get away with stating that opinion as fact without in some manner supporting it?

[Nick Danger]

Not at all. It is asking that what is being stated in a manner implying it is a fact be shown that it is indeed fact

You insist on imputing to Sowell things that he did not say. What he stated as a matter of fact was, "In reality, the number of jobs in the U.S. increased by millions after Nafta went into effect and the unemployment rate fell to low levels not seen in years."

Those are facts. We can get Total Private Employment numbers here. This leaves out government employment, but I think that's fair. If we added them in, the number of jobs would be even larger, making things worse for your case, so I'm being nice here. NAFTA went into effect in January, 1994. In that month, there were roughly 93 million private-sector jobs. Now there are 109 million private-sector jobs. Did "the number of jobs in the U.S. increase[d] by millions after Nafta went into effect?" Yes.

Unemployment rate numbers are here. In January, 1994 the unemployment rate was 6.6%. One year later it was 5.6%. It has been as low as 3.9% since. We've had a recession since, but even today the unemployment rate is a full point lower than it was when NAFTA went into effect.

Never suspect that Sowell doesn't check first when he makes a statement like that. That man simply does not blow smoke. That's not his act. What you asked for was proof of something he did not say. There most certainly is proof of what he did say.

Perhaps the trade surplus growth with Mexico before and after NAFTA would be a good indcator?

An indicator of what? Something like NAFTA would cause us to buy things from other NAFTA countries that we previously had been buying from somewhere else... Eastern Eurpose, Asia, could be anywhere. It's probably possible to figure out how much of the increase in imports from Mexico since NAFTA were substitutions of imports from other places, but it sounds like a lot of work and I don't want to do it. I'll give you a break and make a very conservative guess instead. Let's assume that the only thing we bought from Mexico instead of someplace else was oil. That's a good guess, because any increase in oil purchases from Mexico probably came out of the hide of some Middle Eastern country.

So how big is this increase in the trade deficit? We could start with this. This is the increase in our imports from Mexico:

From this we have to back out the oil imports, which most likely are just substitutes for oil imports from some other place.

In recent years we have been importing about 1.5 billion barrels/day from Mexico, at an average price of about $23/barrel. So that's about $34 billion a day, or about $12 trillion a year in oil imports.

Now go back and look at that imports chart. About $12 trillion a year, I'd say. So it looks like almost all of the rise in our imports from Mexico are related to us buying oil from them that we would've bought from the Saudis or someone like them.

To compute the deficit, we need to factor in our exports to Mexico. That looks like this:

Eyeballing these charts, it look like we went from almost an even trade balance in 1994 when NAFTA went into effect, to something like $2.5 trillion deficit in recent years. But almost all of our imports from them are crude oil, wheras most of the stuff we're exporting to them are foodstuffs or manufactured goods. We already know we have an oil import problem, but to promote the idea that there is some "giant sucking sound" of jobs moving to Mexico is to lie to people. We're selling them $9 trillion a year in stuff. We're buying raw materials. Stop this "jobs moving to Mexico" nonsense, willya?

You wanted data, you got it. Now let's have no more arm-waving hoo-hah about jobs and Mexico.

[templar]

"In reality, the number of jobs in the U.S. increased by millions after Nafta went into effect and the unemployment rate fell to low levels not seen in years."

Well, then why doesn't he simply state the statistics. HE is th one bemoaning the lack of data in arguments. So why does he go on to make an argument that lacks data? Trying to tie employment, or other economic data, figures that have nothing to do with NAFTA to NAFTA is absurd.

We already know we have an oil import problem, but to promote the idea that there is some "giant sucking sound" of jobs moving to Mexico is to lie to people.

I know several former machinists that are no longer machinists because they're jobs were taken over by Mexico. I know absolutely no one that has a job that can be attributed to trade with Mexico, particularly no one that can attribute their job to NAFTA.. Those are the facts, not lies.

[Nick Danger]

I know several former machinists that are no longer machinists because they're jobs were taken over by Mexico. I know absolutely no one

If your intent is to argue this with anecdotal data from your personal life, we're done. Happy demagoguery!

[templar]

If your intent is to argue this with anecdotal data from your personal life, we're done.

You opened the argument. I only criticized Sowell for bemoaning arguments not based on data then not offering any relatable data in his own argument (from his personal life or otherwise). I don't care at all what data you may wish to submit or not since my issue is Sowell's lack of data. I am taking issue with Sowell, not you. You are not the author of the article and it is of no purpose to argue the authors lack of data with you. Why are you defending him? Surely you are not him on FR as Nick Danger?

[Nick Danger]

Why are you defending him?

Because he is an honest and honorable man.

Surely you are not him on FR as Nick Danger?

I wish. There aren't five guys in the United States who have a mind as rigorous as Thomas Sowell's. Most of us can only aspire to that. He has achieved it.

my issue is Sowell's lack of data.

It's a newspaper editorial. If you want academic papers with footnotes and Tables 1 through 20 in the back, read the American Economic Review.