Jack Kemp, an American hero

Fiscal conservatism 104

One day about six or eight years ago, I was channel surfing and I saw a guy who looked vaguely familiar addressing a group about the economy.

This guy was Jack Kemp, former NFL quarterback and former Congressman from Buffalo, NY. I'm not a sports fan so I won't hold his football-playing against him. A guy's got to make a living. I believe he was also in the Reagan or first Bush administration as the head of HUD.

Kemp was riveting. As I recall, he talked about motivations and how to help the poor. He realized that compassion had to fit within capitalism; it couldn't be dictated "from the top down" as the government wants to do. He believed that "poor people" were winners under capitalism and losers under socialism. I think that is still true, and President Obama is (sadly) helping to prove that point.

I googled Kemp and came across a series of articles he wrote in 2008. One is http://townhall.com/columnists/jackkemp/2008/10/28/the_treats_to_our_mar... which talks about how Obama was proposing to redistribute wealth by giving money out to poor people ("tax credits") and increasing the rates on "the rich."

In my first article (see Free $100 bills, http://www.actonforum.com/blogs/allenn/free-100-bills) I tried to give an example of what the government is doing but made it a bit more obvious. When you hand someone $100, they can buy groceries that week, but are you going to be there next week with another $100? And another? When does this cycle end?

There are so many problems with giving away free money. You build an "entitlement" culture. You reward "not working." Just the opposite: you penalize working. You increase government overhead to make the free market less efficient. And, these days, you are borrowing money which means the actual pain of the giveaway is not yet being felt. Future generations will suffer because of our overspending today.

Another issue these days is the government controlling the interest rate. By keeping it artificially very low, citizens who have done the right thing by saving for retirement are getting penalized, while government borrowing and debt is getting much less expensive (which then encourages more borrowing and debt.) Of course, our politicians don't say this is the reason. They cite "economic growth." Yet our economy is growing much more slowly coming out of a recession, which started five years ago. I can imagine they'll still be blaming the recession on George W. Bush during Hillary Clinton's second term of office.

Anyway, let me urge anyone who is following this series to find some Jack Kemp videos on supply side economics and watch them.

Here's an obituary of Kemp who died in 2009: http://content.time.com/time/nation/article/0,8599,1895534,00.html

And here is a speech/discussion Kemp had with some members of the Georgia Republican Party. It's an hour but very interesting: http://www.youtube.com/watch?v=-Z9PevJvUKQ

I'm watching this speech and it is excellent. Too many good lines to quote, but here is one (and this is in 1993):

"Socialism is morally bankrupt as well as intellectually bankrupt. There aren't 10 leaders around the world who still believe in socialism."

Kemp was a big proponent of "supply side economics." But when he talked about this on this video, he said that the term has been corrupted and mangled to turn it into "trickle down economics" which makes it sound like it favors the rich. Kemp said a better phrase would be "incentive based economics."

Capitalism is all about incentives. You need to have people offering goods and services that want to make a profit. There needs to be goods and services they want to buy so they can spend their profit (which is the real incentive, of course.) And you have to have buyers who believe they are personally better off after purchasing these goods or services, which is why they buy them in the first place.

Think of it this way: capitalism is a system where a trade between two parties produces two winners. In other words, everyone benefits.

What goes along with capitalism is freedom. You must be free to offer to buy and sell services with minimal government interference.

Here's another good line from the video, about expanding free trade under NAFTA: "Not since Batman have so many strange characters opposed any one idea." Kemp of course would favor NAFTA as a free-trade proponent.

Kemp then says that on the cusp of these improvements, America takes a step back and elects Bill Clinton. And as you may remember, the first few years of the Clinton presidency were extremely liberal. (Clinton dialed that back in his second term.)

Jack Kemp talks about the Clinton strategy to nationalize health insurance. Many of the Obamacare ideas are discussed 20 years ago by Kemp and his points are just as relevant today.

For example, there was a 50-employee threshold for providing health insurance (sound familiar?). "What if you have 52 employees? What if you have 49, would you hire anybody? The whole incentive is to shrink the labor base of the country."

Listen to this one: "If you increase the demand and hold down the supply, it is an old-fashioned, classical 18th century prescription for shortages and rationing and that is where they are headed." In 1993, Kemp predicted our coming Obamacare crisis. By giving out millions of free health insurance policies, we will be spending more money and costs will go up, but the number of doctors has not increased, which will lead to longer waits. When the government really starts to get involved (remember, a lot of government involvement has been put off until after the 2016 election), we will see fewer of the best students entering the medical profession and the government will try to control costs by limiting doctors' incomes. Then things will really start to hit the fan.

Kemp was also known for his concern for poor people. But Kemp's prescription was not what the Liberal Democrats propose (give them money) but empower them to become productive, responsible, and contributors to society. That is the goal of capitalism, to lift everyone up.

This was one of his most important legacies because in the years since, America's income inequalities (as Obama likes to call them) have gotten worse in spite of our society pouring money into handing out $100 bills to our needy. The more bills we hand out, the more they need. We have more poor people, more people on welfare and food stamps, more people out on disability. We've had a "war on poverty" for 50 years. How come things don't seem to be getting better?

Kemp does make one big mistake near the end of his talk, and perhaps that's because he has not lived through the times we have now. He says that Republicans must compete in elections. We should want everyone to vote, and we should battle in the realm of ideas. Just like we value consumers who decide what products will be produced by their economic choices, the same is true for politics.

Of course, Kemp is right is theory. But when the party in power (Democratic) is tipping the voting scales by essentially paying people to vote for their party over their competitor, the election results get skewed. This is what Mitt Romney was complaining about in his 47% comment during the 2012 campaign, which he disavowed because he didn't want to offend potential voters.

Kemp also believed in bipartisanship. Again, a noble goal and one which has generally served our country well. But if bipartisanship means the Democrats want an $800 billion deficit and the Republicans want a balanced budget, then a $400 billion deficit isn't much of a compromise other than mathematically. Either way, we still run out of money.

Kemp didn't care about someone's political affiliation, he didn't care about the color of someone's skin. He cared about their philosophy and he was opposed to socialism because it was worse for economic growth and freedom.

NEXT ARTICLE: What is socialism and why is it bad? http://www.actonforum.com/blogs/allenn/what-socialism-and-why-it-so-bad

PART ONE (Introduction): http://www.actonforum.com/blogs/allenn/political-philosophy-fiscal-conse...

PART TWO: http://www.actonforum.com/blogs/allenn/free-100-bills

PART THREE: http://www.actonforum.com/blogs/allenn/mountain-full-donkeys

PART FOUR: http://www.actonforum.com/blogs/allenn/you-didnt-build-those-cabins

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