Thursday , September 27, 2012 - 12:38 PM
The Standard-Examiner has recently published two articles, one by Dr. Vijay Mathur ("Ryan’s muddled thoughts are of Rand, Hayek," Sept. 14) and another by Jack Allen ("Ayn Rand’s true disciple," Sept. 21) which make specious claims that the basis of Ryan’s and therefore Romney’s economics policies are theories of unfettered free market capitalism with their genesis in the writings Ayn Rand and Friedrich A. Hayek.
A thorough understanding of classical economic ideas requires an in depth reading of philosophies by liberal and conservative economists alike. Among those to be studied are Adam Smith, Milton Friedman, John Maynard Keynes, John Kenneth Galbraith, Ludwig von Mises, Gordon Tullock, and others. In a fair pursuit of knowledge and truth one must read a variety of sources. Not everything Keynes and Galbraith taught is axiomatic truth. The same is true of Smith and Friedman. Yet both Mathur and Allen would have you believe that Ryan is exclusively a "Kool-Aid" drinking disciple of Rand. It is clear Ryan has studied a variety of economists including Rand and has gleaned nuggets of truth from each while at the same time discarding from each those concepts which lack merit.
Mathur makes the following statement. "Mr. Ryan must understand that...Rand’s ideas on free markets must be tempered with economic reality... It is the government that had to come to the rescue of markets in the Great Depression of 1930s and again in the great recession of 2007-08;"
What Mathur fails to mention is that many economists including two UCLA professors, Harold L. Cole and Lee E. Ohanian blame Franklin D. Roosevelt’s economic policies for "thwarting" the Great Depression’s economic recovery for seven long years ("New Deal Policies and the Persistence of the Great Depression," August 2004).
In 2004, Ohanian stated, "Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10 to 15 year economic slump...we found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
It isn’t surprising that Mathur wouldn’t provide a balanced argument of government’s role in extending, or reducing the duration of the Great Depression. On his economic blog on the Standard Examiner’s website, he supports the writings of liberal economists Peter Diamond and Emmanuel Saez, who believe the combined state and federal income tax rates should be at a dizzying 70 percent (based upon their misguided belief that it is at that level where the inflection point of the "Laffer Curve" occurs)! If you are looking to give up to 70 cents of every dollar you earn to government, then Mathur is your kind of economist.
Mr. Allen, in his column, states, "No one should be fooled by the Republican intent to dismantle Social Security. That was made clear when the Bush administration attempted to convert it to the whims of Wall Street in 2005 ... it was clear even then, that the right wing goal was to eliminate it altogether."
The truth is that the Republican position is to first protect the Social Security Administration (SSA) from bankruptcy. The 2012 Annual report on Social Security shows it has an $8.6 trillion unfunded obligation. Furthermore, $2.7 trillion in current SSA assets are "Special U.S. Treasuries." This $2.7 trillion obligation of the U.S. government (Fed) represents payroll taxes which were collected to fund Social Security but which were borrowed by the Fed and spent on other programs.
For the fed to make good on this $2.7 trillion debt owed to the SSA your federal income taxes will need to be raised by an equivalent amount. Likewise for the SSA to make good on the $8.6 trillion unfunded liability, payroll taxes (FICA) would need to go up approximately 250 percent. Simply put, for the Fed to make good on the combination of these two liabilities totaling $11.3 trillion, the federal government would need to increase taxes at the rate of twenty-one cents for each dollar you earn. This is over and above taxes you already pay. Add these taxes to the costs of Obamacare plus the annual interest and principal payments on a $16 trillion national debt and the 70 percent tax rate espoused by Mathur will be close to reality.
It is obvious the Democrats’ plan to maintain the status quo of Social Security will result in its bankruptcy. The Romney/Ryan plan maintains benefits at current levels for everyone 55 years of age and older, while restructuring SSA’s finances for those less than 55. Failure to "right the Social Security ship" as proposed by Romney/Ryan will put all current and future retirees in jeopardy. The republicans are truly the party of compassionate reality.
It is clear that the Romney/Ryan plan to rescue Social Security is far, far different from Ayn Rand’s minimal government philosophies and contrary to claims of both Mathur and Allen, is tempered with the economic and fiscal reality needed to preserve it for those of us who paid into it over our long working careers as well as those paying into it over the years to come.
Dickson is a retired executive in the energy and natural resources sector who lives in Pleasant View.
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